Energy transition responsible for fuel shortages, inflation, high cost of living – NNPC GMD

Oredola Adeola

Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari has said that energy transition as being championed by global decarbonisation is responsible for fuel shortages, inflation, high prices of petroleum products and increased cost of living mostly in Africa.

He made this known in his keynote address on Tuesday at the opening session of the ongoing Oil Trading and Logistics Downstream Expo, OTL Africa Downstream Week, in Lagos.

He was represented by the Group Executive Director, NNPC Downstream, Engr. Adeyemi Adetunji, who said, the challenges of fuel shortages, inflation, high prices of petroleum products and increased cost of living will influence continuous development in autogas, electric vehicles and renewables.

He further said, “The implementation of PIA will support this shift by creating new investment opportunities as the Midstream and Downstream sub-sectors move down the aisle of transition.

“NNPC, is set for the challenges as the Corporation has taken the early lead by restructuring and diversifying its assets portfolio, achieved cost reduction and return to the profitability trajectory, and has progressed well with PIA implementation by transiting to a CAMA company.

Kyari however charged other industry players to join and seize the opportunities that energy transition offered , urging the need to remain innovative so as to thrive as the industry transits. The post-PIA space is big, promising poised to be rewarding.

He affirmed that the theme of the event: “Downstream in Transition: Getting Set” has underscored the reality of Nigeria’s Oil and Gas industry. According to him, incentives for long-term investments in hydrocarbon have waned, challenging investors to sharpen their management practices to strategize to enable them to seize the investment opportunities under PIA.

Kyari said, “Transition to gas fuel provides investment opportunities in Autogas via conversion of petrol and diesel-powered automobile engines to natural gas use. This involves provision of conversion kits and establishment of centers to convert vehicles, building of CNG and L-CNG facilities, and deployment of CNG/LNG trucks to achieve the 1 million vehicles target.”

Dr. Emeka Akabogu, Chairman, OTL Africa Downstream at the Opening Ceremony of the 15th OTL Africa Downstream said, the sessions reflect the crucial issues which the industry must address, and seek to find a path to clarity, increased investment and confidence.

He stated that “Mergers and acquisitions are active in the fuel retail space which we will be considering, while safety and efficiency remain crucial to profitability in shipment of petroleum products, particularly in the Gulf of Guinea.

Governor Babajide Sanwo-Olu, in his goodwill message to the participants said that global climate action agenda and increasing pressures for decarbonization are reshaping the future of the oil and gas. He added that the downstream sector is no exception.

The Governor who was represented at the event by Engr. Olalere Odusote, Commissioner for Energy and Mineral Resources, said that disruptions in the transportation sector has accelerated the pace of Natural Gas Vehicles, which provides opportunity for significant gas infrastructure investment.

He also noted the development has led to the advent of Electric Vehicles, adding that EV poses a real threat, that may have near term business implications on the operators in the downstream sector.

Governor Sanwo-Olu charged players in the downstream sector to be well positioned to take advantage of investment opportunities in such areas as EV charging value pool (EV charging infrastructure and complimentary on-site service offerings) which McKinsey estimates has the potential to grow $20 billion by 2030.

The Governor said, “This puts African oil and gas retailers in a strong position to take the lead by treating it as an incremental business and capitalizing on their existing locations and facilities to deliver it, they could generate a high return on investment.

“Safety in the downstream oil and gas sector in Nigeria is currently plagued with incessant disasters ranging from pipeline ruptures (vandalism and lack of adequate maintenance/inspection) to irresponsible petroleum tanker operations (reckless and inept tanker drivers, poor maintenance, truck integrity issues, amongst others), causing oil spillages, fires and explosions with consequent socio-economic loss to country and its residents ranging from third degree injuries and burns to loss of lives and properties as well as environmental degradation.

“Strategies targeted at promoting safe operations and global best practices in the sector is key to ensuring its sustainability.

“Leveraging digitalisation and data-driven decision are key imperative decision that could help the sector minimise its carbon footprint, increase productivity and decrease costs, as well as support new business models.”

He restated his government’s commitment to ensuring energy security and deepening the utilization of cleaner fuels in Lagos State to ensure a safe and sustainable environment for its residents.

Sanwo-Olu said, “There is an urgent need to reposition the sector in the global transition map, to not only survive the low carbon energy transition, but to support and lead it, because the energy transition towards a more sustainable and lower carbon footprint will have a significant impact on the downstream sector.