Focus On The Africa Energy Bank With Dr Omar Farouk Ibrahim
July 20, 2024
By Ajong Mbapndah L
Dr Omar Farouk Ibrahim says the AEB is Africa's response to the looming financing challenge that the global paradigm shift poses to the oil and gas industry in Africa.
With over 125 billion barrels of proven crude oil reserves and over 600 trillion cubic feet of proven gas reserves, and more findings being made; it does not make sense for Africa to abandon these energies when it has the largest proportion of world’s population living without access to modern energy, says Dr Omar Farouk Ibrahim, Secretary General of the African Petroleum Producers' Organization -APPO. In a sign that Africa maybe going past the era of all talk and no action, the APPO and Afreximbank signed the Africa Energy Bank (AEB) Establishment Agreement and the Charter of the Bank, declaring it open for signature and ratification by the 18 APPO Member States.
Fielding questions in an exclusive interview with PAV, Dr Omar Farouk Ibrahim says the AEB is Africa's response to the looming financing challenge that the global paradigm shift from fossil fuels to renewable energy poses to the oil and gas industry in the continent.
While the AEB’s main focus shall be funding oil and gas projects, it shall not close its doors to renewable energy projects and shall strive to harness all forms of energy to ensure that Africa’s energy poverty is eradicated, says Dr Omar Farouk Ibrahim.
“With the signing of the Establishment Documents by the two founding institutions, APPO and Afreximbank, and the ratification by one Member Country, the decision on the location of the Headquarters of the Bank, all that remains is to have just one more Member Country sign and ratify the Establishment Documents for the Bank to be ready for takeoff,” says Dr Omar Farouk Ibrahim in the interview which also addressed other perspectives at APPO and the African Energy sector.
Dr Omar Farouk Ibrahim, thanks for agreeing to answer our questions, could we start with situating the importance of APPO in the present-day development dynamics of Africa?
I who would like to begin by thanking you warmly for the interest shown by your prestigious magazine in the African Petroleum Producers' Organization (APPO). As you might be aware, APPO was established as the African Petroleum Producers’ Association, APPA, in 1987 as an African intergovernmental energy organization by eight African oil and gas producing countries, namely Algeria, Angola, Benin, Cameroon, Congo, Gabon, Libya and Nigeria. Between 2015 and 2019, the Association underwent a major reform culminating in a change of mission and vision as well as the organizational structure and decision-making processes. The name APPA was also changed to APPO, to reflect the commitment of Member Countries to greater collaboration and cooperation, not just to associate. Today, APPO has grown to 18 full Member Countries and one Honorary Member Country.
One of the major assignments undertaken by the Secretariat after the reform was to conduct a study on the Future of the Oil and Gas Industry in Africa in the Light of the Energy Transition.
While the AEB’s main focus shall be funding oil and gas projects, it shall not close its doors to renewable energy projects, says Dr Omar Farouk Ibrahim
The findings of the study were that the African oil and gas industry faces three imminent challenges, which if not seriously and urgently addressed could lead to the total collapse of the industry in Africa. These challenges were the challenge of funding oil and gas projects, the challenge of acquisition and mastery of oil and gas technology and expertise and the last one is the challenge of oil and gas markets and infrastructure. The study noted that the countries that Africa has been relying on for several decades for funds to do oil and gas projects have committed to stop funding oil and gas projects, especially in Africa. The second challenge, technology and expertise, like finance, has also been characterized by huge dependence on companies outside Africa. The study noted that almost all the research and technology on the industry are done outside Africa. It was noted, for example, that some of the world’s famous institutions for oil and gas studies and research are closing down their faculties of petroleum. The danger is that if Africa does not quickly master oil and gas technology it risks losing the capacity to exploit the resources in its soil and seas. The third challenge is that of markets. The study established that the African oil and gas industry was created from the very beginning to serve interests outside Africa. That is why all the pipelines in the continent ran from oil and gas fields to the seaports. Seventy five percent of Africa’s oil and 45% of gas is exported outside Africa. Now that this market is being threatened are we going to stop oil and gas production because the markets are drying up? These are the challenges that the Global Energy Transition pose to African oil and gas producing and revenue dependent countries in APPO. In the last two years, since the study was completed, our focus in the Secretariat, guided by the Executive Board and the direction of the Ministerial Council has been on how best to address these three imminent challenges. The efforts to establish the Africa Energy Bank, the efforts to create regional centers of excellence in the various sectors of the industry and the efforts to get the Central Africa pipeline system started have been our preoccupation.
On June 03, 2024, APPO and Afreximbank signed Establishment Agreement of the Africa Energy Bank, can you shed some light on this for us?
How important is the Africa Energy Bank, and with the agreement with Afreximbank, how close are you to its operational phase?
We are pleased with the responses of our Member Countries to the fundraising for the AEB, says Dr Omar Farouk Ibrahim seen in discussions with Congolese Minister of Hydrocarbons Jean Bruno Itoua who doubles as Alternate President of APPO
The Bank’s initial capital is $5 billion, should a continent with the size and potential of Africa have challenges raising this capital, how strong is the political will from African governments to see the AEB vision actualized?
We are pleased with the responses of our Member Countries to the fundraising for the Africa energy Bank. A number of Member Countries made deposits even before the Establishment Agreement and Charter were signed. That should tell you about how keen they are to see that AEB takes off. With the signing of the establishment documents, the decision on the headquarters and ratification by a member country, and the mandate to have the Bank take-off this year, we are seeing a lot of interest from our Member Countries.
We in APPO do not believe in the false narrative that Africa is too poor to establish a strong and successful multi-billion-dollar Bank, without near-total dependence on outside Africa. It is a matter of prioritizing our expenditure. And since the oil and gas endowed countries know that for some time to come they will continue to depend on oil and gas revenue to meet their obligations and they will also need energy to get their populations out of poverty, they are committed to making the required investment.
This is one of the key items to be tabled before the Summit of the APPO Heads of State which HE Denis Sassou N’Guesso, President of the Republic of Congo, the Headquarters of APPO, is hosting soon.
Nigeria was recently selected as host country for the Africa Energy Bank in a process that had Algeria, Benin, Côte d’Ivoire, Ghana, and South Africa as candidate countries, may we know some of the factors or considerations that weighed for Nigeria?
The final decision on the choice of the Headquarters was made on Thursday 4th July 2024 by the 45th Extraordinary Session of the Ministerial Council. The meeting, which was held virtually, was chaired by H.E. Bruno Jean Richard Itoua, Minister of Hydrocarbons of the Republic of Congo, and Alternate President of the Council of Ministers of APPO. The Session considered the report and recommendations of the Ministerial Committee for the Selection of the Headquarters of the Africa Energy Bank (AEB), chaired by the then Libyan Minister of Oil and Gas, His Excellency Mohamed Oun. Other members of the Committee were the Ministers of Angola, Senegal, Venezuela and the President of Afreximbank.
A number of criteria were used in evaluating the bids of countries, including accessibility of the city in terms of frequency of international flights, level of socio-economic and health services, cost of living, security index, experience in hosting international/intergovernmental organizations, and the proposed headquarters building.
You and others in the continent have been harping on Africa’s special needs and realities of Africa when it comes to issues of fossils, do you think the rest of the world is getting the message that Africa is willing to stand its ground on how to meet its energy needs?
It depends on what you define as the world. For too long, we have been made to believe that what the powerful nations define as their interest is also the interest of all of us in the world. This is a false narrative. We should be able to determine what is in our best interest and stand by it at all times. If it coincides with that of the powerful nations, all fine and good. But we must not be made to accept the interests of others as our interests, without critically looking into how they arrived at those interests being in our interest. To us in APPO energy is an existential challenge. Hundreds of thousands, if not millions of people die from respiratory diseases due to inhalation of bio-waste fumes.
We are pleased with the positive visibility that APPO has been receiving in recent years. Our message is getting out clearly across the industry. Our position on the energy transition is becoming more and more popular, especially in Africa and with other developing countries.
How much growth in Membership has taken place at APPO since you became Secretary General and what are some other seminal developments that have taken place under your stewardship?
We grew from the initial eight founding members in 1987 to 15 at the beginning of the reform in 2015. After the reform and seeing how serious APPO has become, we added three new Members in just one year.
The major work we have done in the last four years I would say are the conduct of a major study on the future of the Oil and Gas Industry in Africa in the light of the energy transition. And following from the findings of the study, working to address the identified challenges. In that respect we have reached advanced stage in the establishment of the Africa Energy Bank, AEB. Another important focus has been on the establishment of regional centers of excellence in oil and gas technology and training. This is being spearheaded by APPO in collaboration with the Forum of CEOs of APPO NOCs and the Forum of Directors of Research, Development and Innovation as well as the Forum of Directors of Training Institutions in APPO Member Countries. Furthermore, to address the market challenge we are working on the realization of a major project called the Central Africa Pipeline System, CAPS, that aims to link 11 Central African states by a comprehensive pipeline for crude oil, gas and products.
We see the African Energy Chamber and its CEO, NJ Ayuk as key promoters of the continent’s position on the global energy transition, says Dr Omar Farouk Ibrahim on their MoU
APPO signed an MoU with the Africa Energy Chamber in Brazzaville early in the year, how important is the Chamber in complimenting or working together on the vision APPO?
We have had MoUs with the Africa Energy Chamber in the past. So, what we did early this year was just to renew the MoU. We have been partners with AEC from Day One on the Africa Energy Week. We see the Africa Energy Chamber and its CEO, NJ Ayuk as key promoters of the continent’s position on the global energy transition. We share common views about energy and the way forward for our continent.
What will the agenda at APPO look like for the rest of 2024?
For the rest of the year, our focus is to ensure quick and effective take-off of the Africa Energy Bank. In this context, we plan to be in Abuja soon to finalize and sign the Headquarters Country Agreement and also to ensure that all the facilities required for the effective take-off of the Bank are in place. Furthermore, we shall begin an aggressive fund-raising drive, beginning with our Member Countries and later outside our Member Countries. Of course, we will also work to have our Member Countries sign and ratify the Establishment Agreement and the Charter. It will interest you to know Ghana has already ratified the Establishment Agreement and Charter of the AEB. We will also be pursuing our objectives on the setting up of regional centers of oil and gas excellence as well as our program on energy infrastructure development.
We created a Forum of CEOs of APPO Member Countries, and we have found this forum most useful in charting the right course for the Africa oil and gas industry. The Forum is scheduled to have its next meeting in Malabo, Equatorial Guinea, next September.
