Diezani Alison-Madueke, the Minister of Petroleum in the Federal Republic of Nigeria, has been interviewed in ThisDay newspaper. Nigeria is a large oil exporter in West Africa., a photo by Pan-African News Wire File Photos on Flickr.
Nigeria, others to bridge $8tr oil investment gap
Friday, 09 September 2011 00:00
By Collins Olayinka and Sulaimon Salau
THE oil and gas financing in Nigeria and other African oil producing countries may soon be repositioned on an enhanced platform, to generate about $8 trillion new investment in the continent.
The stakeholders in the petroleum and financial sectors across the continent are grooming up for a maiden summit in Abuja next month, to strategise on mobilising funds into the African energy sector.
The International Energy Agency (IEA) had projected that about $17 trillion new investments would be needed between now and 2025 in the emerging and developing economies, out of which $8 trillion is expected to be in Africa.
The Executive Director of African Petroleum Producers Association (APPA) Fund for Technical Cooperation, Dr Babafemi Oyewole, said yesterday that the forum would galvanise strategies for mobilising the financial resources required for the development of the oil and gas industry in Africa.
Underlining the need for the continent to harness its potentials in sourcing finances for investment in oil and gas sector, Oyewole argued that although efforts are on to develop alternative energy sources to reduce global dependence on hydrocarbons, oil and gas resources would still continue to play important and strategic roles in the economic development of oil and gas producing African countries, as a major export product and source of foreign exchange.
“There is no doubt that the current global economic and financial situation is posing tremendous challenges to the financing of investment opportunities in member countries due to intense competition from either regions of the world and reduced inflow of foreign direct investment. Africa needs to understand these issues and design workable policy responses to ensure a sustainable development of this strategic economic sector.”
He added that the participation of African financial institutions has been very marginal because of the capital intensity of investment projects in the oil and gas industry.
The conference, tagged: “Oil and Gas Africa Financing and Investment Conference (OGAFIC)” would serve as a platform for enhancing oil and gas investments in the African region by bringing together all stakeholders in the industry.
To encourage African financial institutions’ participation, Oyewole said the congress of APPA would, seek to analyse and generate ideas on the role financial institutions can play in developing the oil and gas industry in Africa with respect to financing investment projects through several ways.
“These include joint-financing of strategic oil and gas infrastructure such as pipelines, strategic stocking facilities; joint-ownership participation in oil and gas projects. Aside from providing credit facilities to strategic projects, the financial institutions could also cooperate to take equity positions in oil and gas projects.
“There could also be joint-mobilisation of domestic and foreign financial resources for financing oil and gas projects, probably in partnership with other international multilateral or bilateral financing institutions and co-financing of studies and research projects that are aimed at increasing the production capacity and reserve position of Africa in the global oil and gas resources,” he said.
Babafemi argued that while the last few decades have seen Africa’s hydrocarbon industry witnessing a renaissance with major new producing countries preparing on the global production map and several others due to come on line in the next few years, investment is still vitally needed in the upstream, midstream, downstream and ancillary projects in order to fully utilise Africa’s oil and gas potentials and at the same time increase its share of global reserves and production.
He further highlighted that the coming on board of other African countries will no doubt increase the call for better living condition of the populace, but regretted that the call for better life may not materialise until the required investment is mobilised to achieve optimisation of potentials.
He stressed: “These developments have thrown up tremendous opportunities for investment in the areas of exploration, production, refining and infrastructure in the oil and gas sector to further enhance it’s contributions to the socio-economic development of Africa.”