OPEC, stakeholders raise concern over $12.6tr oil, gas investment

Nigeria and other oil-producing nations might find it difficult to raise over $12.6 trillion needed for oil and gas investment before 2045, the Organisation of Petroleum Exporting Countries (OPEC) and experts said yesterday in Abuja.

The most populous black nation has been struggling to finance oil and gas projects, as over $160 billion upstream projects remain in limbo, while major financiers are already declining to fund some programmes with Final Investment Decisions.

Coming few weeks after the International Energy Agency called for a halt to fossil fuels investment in an attempt to meet a net-zero emission by 2050, OPEC Secretary-General, Mohammed Barkindo, who spoke at the closing session of the 14th Nigerian Association for Energy Economics (NAEE) International Conference in Abuja, acknowledged the daunting challenges facing the sector.

He had said: “Cumulative investment of $12.6 trillion in the upstream, midstream and downstream is crucial through to 2045 in order to meet this need. Investment in 2020 dropped by more than a whopping 30 per cent in the face of COVID-19, even worse than the dramatic decline seen in the severe 2015-2016 industry downturn.”

According to him, the energy security risk that would result from the feeble investment would heavily impact both producers and consumers, adding that oil-bearing developing countries will be hard hit.

To avert the crisis, Barkindo warned Nigeria and other dependent nations to restrategise, noting that maintaining their positions in the new global energy mix, including focusing on economic diversification, remained critical.

“Oil-producing countries, and in particular African countries that rely on oil and gas production for revenues, must create an investment-friendly climate. To this end, the Petroleum Industry Bill (PIB) promises to be a huge success in reviving the fortunes of the oil and gas industries in Nigeria. Reduced foreign direct investments into Africa’s industry could be catastrophic for many countries and people,” he warned.

Also speaking at the event, president of the association, Prof. Yinka Omorogbe, observed that investment would only go in the direction of favourable fiscal and regulatory outlook.

She added that while the PIB is progressing, implementing the legislation and ensuring justice would be an elixir to attracting investments.

In the face of growing energy gap in the country, Omorogbe said its access must consider human rights, pointing out that the oil industry could use technology to reduce carbon emissions.

She stressed the need to build creative and innovation minds across the federation for energy transition.

In his remarks, a Professor of Petroleum Economics and Management at the University of Cape Coast, Ghana, Wunmi Iledare, who said the country must walk the talk in transiting to cleaner fuel, stated that the PIB had juicy returns for investors.

He, however, feared that poor implementation of the proposed law could rob the nation of immense benefits.

Renowned scholar at the University of Ibadan, Prof. Adeola Adenikinju, regretted that Nigeria does not drive economic growth despite producing so much energy, especially oil and gas.