By Ajong Mbapndah L
While it appears that energy transition poses a serious challenge to our countries that have come to rely heavily on oil and gas revenue from exports, it could also be an opportunity for our countries to take their destinies in their own hands, says the Secretary General of the African
Petroleum Producers Organization (APPO) Dr Omar Farouk Ibrahim.
With over 125 billion barrels of proven crude and over 600 trillion cubic feet of gas, Africa is indeed a force to reckon with in global oil and gas affair, but things are changing especially with the global paradigm shift away from fossil fuels to renewable energy. For Dr Farouk, this reality far from been a fatality should serve as the wake-up call Africa needed to take ownership of its oil and gas industry.
“APPO is committed to pooling the resources of African oil and gas producing and potential producing countries together to create an enabling environment for the industry to survive in the absence of foreign funding, technology and markets,” Dr Farouk says in an exclusive interview with PAV Magazine.
The aggressive pursuit of energy transition by the developed countries may leave us with no choice but to have to master the industry and produce oil and gas for the use of our own economies and peoples, says Dr Farouk as he harps on the need for Africa to take destiny into its hands.
“Africa must take ownership of its oil and gas industry by itself at a time when foreign partners are losing interest in fossil fuels. To do so, African capacity building, technology appropriation, African oil market development, and financing of the sector are the major challenges that Africa must address,” says Dr Farouk in the interview which also dwells at length on the 8th African Petroleum Congress and Exhibition (CAPE VIII) coming up later in the month.
For people who may not know, could you introduce APPO for us?
Dr. Omar Farouk Ibrahim: The African Petroleum Producers Organization (APPO) is an African intergovernmental energy organization created in January 1987 by eight African oil producing countries, namely Algeria, Angola, Benin, Cameroon, Congo, Gabon, Libya and Nigeria. Today APPO has 15 full Member Countries and three Observers from within Africa and outside.
The idea of the founding fathers is to promote cooperation in the field of hydrocarbons between Member Countries and other international institutions and to foster fruitful collaboration and partnerships while using hydrocarbons as a catalyst for energy security, sustainable development and economic diversification in Africa. Its headquarters is currently in Brazzaville, Republic of Congo.
APPO seeks to promote cooperation and capacity building among its Member Countries and with other international energy organizations in all areas of the oil and gas industry, including commercial, scientific, technical, technological, legal, fiscal and human resources. We also work to promote the development of regional energy market and coordinated energy integration strategies on the continent and the oil sector in African countries.
In what shape did you meet APPO when you took over and what are some of the milestones that the organization has seen under your stewardship?
Dr. Omar Farouk Ibrahim: I assumed office in January 2020 after the reform and restructuring of the then APPA had been completed. Not long after my assumption duty, COVID-19 struck. And you know, for most of 2020 the world was not what we had always known it to be. Lockdowns paralyzed the global economy which seriously affected the stability of the global oil market. Again, as you may be aware, our countries were among the worst hit, due to the high dependence of our economies on oil and gas revenues.
In addition to the immediate challenge posed by COVID 19, there was also the challenge of energy transition, where the world, especially the developed countries of Europe and America that Africa had depended on for decades to explore, produce, refine, and market its oil came to the conclusion that the use of fossil fuels is to be discouraged and eventually stopped.
How important is Africa when it comes to Petroleum related issues and stakes?
Dr. Omar Farouk Ibrahim: Africa produces about 8 million barrels of oil per day, 8mbd, or about 9% of global daily production. Most of Africa’s oil is exported outside Africa for two reasons. First is lack of refining capacity, either because the refineries are not enough, or the existing ones are not operating optimally. The second reason, which is more structural is that traditionally most Africa countries that have gone into petroleum exploration and production had done so to serve external markets. They saw petroleum as commodities to be produced not so much for their citizens but to export and get money with which to pay for imported goods and services. That explains why the oil and gas infrastructure in most African countries – pipelines, depots, terminals – run from the hinterland to the coasts.
But things are changing, especially with the global paradigm shift away from fossil fuels to renewable energies. Africans are now taking their destinies in their own hands. Many countries are making progress with local content development in the petroleum industry, with the support of APPO.
With over 125 billion barrels of proven crude and over 600 trillion cubic feet of gas, Africa is indeed a force to reckon with in global oil and gas affairs.
There has been this debate on fossil fuels and renewable energy, what is APPO doing to ensure that the needs and interests of the African continent are protected?
Dr. Omar Farouk Ibrahim: First, APPO does not contest the science of climate change, nor are we against objective and reasonable measures aimed at limiting greenhouse gas emissions, and thereby making the world a better place for all. Our position is that there are many ways to limit greenhouse gas emissions, other than complete elimination of fossil fuels in the energy mix. Technology can drastically limit emissions. But not much effort is being put into the research and development of emission reduction technologies by those who possess the technology. Instead, a lot of resources are being channeled into research and development of alternative energies.
Africa’s petroleum industry is one of the most structurally dependent industries one can find anywhere. Most African countries saw petroleum as commodities that were to be produced and exported for foreign exchange with which to make imports of goods and services. That industry was not developed with the primary objective to serve the citizens. That explains why after so many decades of being in the industry, few African countries can claim to have mastered its technology from Upstream to midstream and downstream. Because the target markets are external to Africa, the technology, expertise and funding also became largely external.
APPO is committed to pooling the resources of African oil and gas producing and potential producing countries together to create an enabling environment for the industry to survive in the absence of foreign funding, technology and markets.
We have identified three challenges in the African oil and gas industry that must be addressed if we are to continue to exploit our God-endowed resources for the good of our people and these are technology, finance and markets. And APPO is working to address the challenges.
Can you shed some light on the 8th African Petroleum Congress and Exhibition (CAPE VIII) coming up in May?
Dr. Omar Farouk Ibrahim: The African Petroleum Congress and Exhibition is a major African event on energy in general and oil and gas in particular. The CAPE is an initiative of APPO which aims to provide a platform for developing relationships and links between decision makers and professionals in the sector, a forum for sharing expertise and discussing strategies, opportunities for business development, investments, partnerships, etc. It is a triennial meeting between oil specialists from around the world and senior African executives in the oil and gas sector. It is organized every three (3) years on a rotational basis in APPO Member Countries. The one in May in Luanda is the 8th edition with the main theme “Energy Transition and the Future of the Oil and Gas Industry in Africa: Opportunities, Challenges and Development”. The event will bring together for three days the actors of the energy sector and the decision-makers of the African and international oil and gas sector who will exchange thoughts on topical issues at the end of which ideas and directives to reconcile the energy transition and the oil and gas industry in Africa for the benefit of Africa will be provided.
CAPE VIII is different from other CAPES in the sense that this is the first CAPE since the start of COVID 19 and it promises to attract some of the key and influential players in the industry. For the first time in over a decade we are going to have a Meeting of the Forum of CEOs of APPO Member Countries NOCs. In addition, the first meeting of the APPO Long Term Strategy Committee is also taking place. Furthermore, there will be the Africa Local Content Roundtable. These are in addition to the Scientific Sessions and the Exhibitions.
In nearly 20 years, 9 Member Countries have hosted CAPE. The first edition was hosted by Tripoli in 2003, followed in 2005 in Algiers, Cotonou in 2007, Kinshasa in 2010 and CAPE V was hosted by Libreville. CAPE VI and CAPE VII were respectively hosted by Abuja and Malabo in 2016 and 2019.
Energy Transition And The Future Of The Oil And Gas Industry In Africa: Opportunities, Challenges And Development is the theme, how does this tie in with the present realities in Africa?
Dr. Omar Farouk Ibrahim: The main theme of the Congress is well chosen and relates to the major concerns of African oil and gas producing countries in this era of energy transition.
The choice of the theme of CAPE VIII was very carefully thought-through. It aims to bring to the fore the key issues of concern to Africa’s oil and gas industry. It aims to provide a forum for these issues to be very well articulated for solutions to be found. It aims to disabuse the minds of many who do not understand the position of Africa on energy transition. Key energy policy makers from APPO Member Countries and beyond are going to articulate our position and the way forward for the industry on the continent.
While it appears that energy transition poses a serious challenge to our countries that have come to rely heavily on oil and gas revenue from exports, it could also be an opportunity for our countries to take their destinies in their own hands. The aggressive pursuit of energy transition by the developed countries may leave us with no choice but to have to master the industry and produce oil and gas for the use of our own economies and peoples. Necessity, it is said, is the mother of invention. Africa must take ownership of its oil and gas industry by itself at a time when foreign partners are losing interest in fossil fuels. To do so, African capacity building, technology appropriation, African oil market development, and financing of the sector are the major challenges that Africa must address. The African countries must go in synergy to face these challenges. Beyond local content development, we are now looking at regional and continental centres of excellence for the development the technology and expertise for the industry in Africa.
From Congress to Congress, how is APPO able to measure progress and successes?
Dr. Omar Farouk Ibrahim: We are able to measure progress from the value addition that participants bring to CAPE that was not brought in a previous CAPE. This value additions could be in the mastery of technology, projects undertaken and capacity building. For example, country A may report that at CAPE 5 it could boast of 20 per cent local content in the industry. But by CAPE 8, that is five years later, it has been able to move to 25 per cent. Furthermore, we measure progress by the number of collaborative projects we are able to record between the events, where the Organization facilitates these collaborative efforts. In addition, we measure our success by the rate of execution of the resolutions or decisions arrived at the Congress.
In all these respects, we have been satisfied with the records so far.
The petroleum sector has strong foreign interests and stakes, how does APPO ensure that there is a balance between foreign partners and presence and indigenous African actors?
Dr. Omar Farouk Ibrahim: As I mentioned earlier the oil and gas industry in Africa was historically developed to service external markets. It is no wonder therefore that foreigners have dominated the industry. Now that the world is committed to abandoning the industry, we are also likely to see less expatriates in the African oil and gas industry. That opens opportunities for Africans.
I also need to state that the oil industry is not a local industry. It is international and has been so from the very beginning. Even under energy transition Africa is not averse to foreign oil and gas experts working in Africa. What is important is what value addition they are bringing to our production process.
We see the African Energy Chamber listed as one of your partners, do you plan on attending the African Energy Week in Cape Town and how important are the chamber and its activities in strengthening the African voice when it comes to petroleum related issues?
Dr. Omar Farouk Ibrahim: The African Energy Chamber, through African Energy Week, and the African Petroleum Producers Organization (APPO) are committed to Africa’s energy and economic future. Focusing on energy transition, oil and gas finance, upstream and technology, the partnership will be critical to the continent as it strives to develop new resources, increase oil and gas production and ensure that Africa is in a strong position to fight energy poverty.
APPO is a partner in the African Energy Week. We were partners last year and we are partners this year. So, it is obvious that we are participating and taking part in the discussions on the future of Africa in the global energy sector.
African Energy Week is an annual exhibition and networking event initiated by the African Energy Chamber and has the full support of APPO. Like last year, this year AEW 2022 will bring together African energy players with international investors and partners to stimulate industry growth and development and promote Africa as an energy investment destination.
And the reason we went into this partnership is to enable the two organizations to expand the dialogue on energy transition including financing oil and gas projects on the continent.
This is a win-win partnership, both for the future of African producers and other partners.
There has been talk about the crisis in Ukraine and its impact, any lessons you think APPO, and African countries can draw from this?
Dr. Omar Farouk Ibrahim: It is important to note that Africa accounts for more than 13 percent of world oil exports and more than 7 percent of gas exports. It also has over 125 billion barrels of proven oil reserves and over 600 trillion cubic feet of gas. These are no mean reserves.
Gas, which represents a little over 17% of the world’s energy mix, is 70 percent controlled by about 13 countries. Among these countries, we have APPO Member Countries such as Algeria, Libya, Nigeria, Egypt and Equatorial Guinea. In the meantime, other large natural gas discoveries have been made in other African countries such as Mozambique, Uganda, Senegal, Mauritania, as well as Tanzania, Niger, Namibia, etc.
This will make Africa a key player in international gas geopolitics. Already Europe is pushing for the actualization of the Trans-Saharan-Gas Pipeline Project, which starts from Warri in Nigeria and passes through Niger Republic through Algeria and finally to Europe. The crisis in Ukraine has increased the urgency for completion of this project. The seriousness with which these three countries take this project was demonstrated last February when the Ministers of Energy of the three APPO Member Countries, Mohammed Arkab of Algeria, Mahamane Sani Muhammadou of Niger and Timipre Sylva of Nigeria met in Niamey to sign an agreement to expedite the completion of the project. When completed the 4,128 kilometers gas pipeline shall carry 30 billion cubic meters of gas per annum. The completion of that project shall also usher a new era in the provision of energy to the cities and towns in the counties along which the pipeline shall pass.
While it is good to have foreign markets for African gas, it is important to note that when Europe becomes dependent on African gas, Africa cannot fail to provide gas to Europe when Europe needs it. Russia can afford not to supply gas to Europe and there is little that Europe can do to Russia. But that will not be the same for Africa. These are matter we should always have at the back of our minds as we go into partnerships.
Besides CAPE VIII, how would the rest of the year look like at APPO?
Dr. Omar Farouk Ibrahim: CAPE is just one of many activities organized by the APPO Secretariat. We are preparing for the APPO Summit of Heads of State, our Ministerial Council Meetings and the Secretariat is always busy pursuing its mandate. We are working on developing a Long-Term Strategy for the Organization in the Light of the Energy Transition. We are also working on bringing more oil and gas producing countries into the organization especially in the light of commitment to developing regional and continental energy market which can best be facilitated by the provision of cross border energy infrastructure across the continent.
The APPO Secretariat also conducts studies on various topics related to the entire value chain of the petroleum sector.