The African Energy Bank, an initiative of the African Petroleum Producers Organisation (APPO), is poised to revolutionise the continent’s energy sector. In this exclusive interview, Valuechain’s William Emmanuel Ukpoju deliberates with APPO Secretary General, Dr. Omar Farouk Ibrahim, as he shares insights into the bank’s objectives and the future of Africa’s energy industry.
According to Dr. Ibrahim, the African Energy Bank aims to provide financing for the development of Africa’s oil and gas resources, prioritizing the needs of Africans. The bank has already secured significant funding and is expected to commence operations in the first quarter of 2025.
Dr. Ibrahim emphasized the need for Africa to develop its energy market rather than relying on foreign aid or grants. He cited the example of Nigeria’s innovative approach to funding local content development through the Nigerian Content Development and Management Board.
The APPO Secretary-General also highlighted the importance of regional cooperation and knowledge sharing in driving Africa’s energy growth. He noted that APPO is working to establish regional centres of excellence in oil and gas, which will facilitate the development of indigenous technologies and expertise.
As Africa strives to achieve energy independence and end energy poverty by 2030, the African Energy Bank is poised to play a pivotal role in driving this transformation. With its focus on empowering African energy producers and promoting regional cooperation, the bank is set to unlock the continent’s vast energy potential and propel Africa towards a brighter energy future.
Good day Your Excellency. Let me begin by congratulating you, APPO, on successfully launching the African Energy Bank. Could you give us an overview of your purpose here in South Africa, and what’s APPO into lately?
Let me start by saying I am in South Africa to attend this year’s African Energy Week along with industry and various government officials across Africa and beyond to discuss Africa’s energy poverty and find solutions to our energy problems. Africa cannot afford to lag especially when it comes to solving our energy needs. Today we have modern energy for cooking; we have over 125 billion proven crude oil reserves and over 600 trillion cubic feet of gas.
Are we going to leave these resources in our subsoils because the world has said it’s moving on from oil and gas, or because we don’t have the finances? We believe that Africa has money, the question is how to prioritise this expenditure, energy is critical to survival, so we came together to establish the energy bank, and in the last 2 years, since the MoU was signed between APPO and Afreximbank, in 2022, we’ve made tremendous progress, we have been able to get the establishment agreement and the chatter of the bank, signed by the 2 founding organisations, we’ve been able to get the treaty already enforced because our establishment agreement said that even though all APPO member countries are going to be members, once you have 2 to sign and rectify, the treaty will come into force and the others would join. Last October 24, President Tinubu of Nigeria signed the rectification of the establishment agreement of the African Energy Bank. Earlier on the President of Ghana, Akufo Addo had done the same thing for Ghana, so that hurdle has been cleared.
The second is the headquarters; on the 4th of July, our member country’s ministers met and made a decision on which country was going to host the headquarters of the bank and Abuja Nigeria was chosen. Nigeria has identified the building; they’re trying to put the finishing touches to make it available for us; according to the minister, by the end of this month. We are targeting the first quarter of next year for the bank, we have already raised about half of the money we need to be able to start the bank, the equity capital of the bank is about 5 billion dollars but we are not going to raise 5 billion before we start the work, we have agreed that raising 500 million (USD) will get it started and when people see that you’re serious, they’ll bring in their money.
The bank is going to focus primarily on oil and gas to ensure that we’re able to bring out our oil and gas; also primarily for the use of our people. We are not looking at producing oil and gas today to export as we have done in the past.
Talking about funding, you did say that you have half on the ground, and you’re preparing to get the other half after the take-off. Are there any strategies involved in getting this half?
No, we are not saying that we have half on the ground, we’ll get half when we start. No, we’ll have 100% of what we need before we start by the end of the first quarter of next year. I want you to understand that the 50% that we got so far, we got it even before we had signed the establishment agreement, but with the signing of the agreement in July, the tempo has risen a lot in our member countries because they see that yes, these guys are serious, and in the last three, four months, the efforts from our member countries to raise these funds have increased tremendously. We are confident that by the end of the first quarter of next year, we should be able to raise the funds we need. As I told you, it is a partnership between APPO and Afreximbank, we are bringing half, and Afreximbank is bringing half. Afreximbank; the money is not a big problem because the bureaucracy is not there, once they get the approval of their board, they can… but with us, even though you can get approval of the necessary levels of approvals, there are always some bureaucracies that delay the release of the funds.
Let’s look at the AEW, if you look at its main objective, which is bringing African Energy leaders in the private and public sectors to see how they can promote African Energy. What is your assessment, has it been able to achieve this goal?
Relative to the age of African Energy Week, I believe we’ve done tremendously well. AEW came post Covid19, and the attraction and support that it has received from our member countries from Africa generally, even outside Africa both at the policy level with ministers and at operations in the NOCs and private sector, has been most encouraging, I think we are on the right path, the themes of the various sessions are very topical, they address the critical challenges that are facing the industry as well as the imminent ones, we hope that in the future, this would go beyond just seminars and sessions but we want to be able to introduce in AEW… I don’t know if you were at the opening ceremony, but I spoke on the challenges we had in the last three years, where there is unhealthy competition between event organizers in Cape Town and across the continent, inviting the same type of people, discussing the same issues, most of the time doing this back to back. One of the challenges I was given by Minister Mantashe of South Africa, Minister Itoua of Congo, and Minister Gabriel of Equatorial Guinea was that “Look, SG, you are the leading energy organization in the continent, it doesn’t make sense for us to come to Cape Town today, go home, and one or two weeks later, we come back, streamline this.”
I had a series of negotiations with African Energy Week; by the way, APPO has been a partner in Africa Energy Week from day one, and also with Africa Oil Week.
Eventually, we’ve been able to agree that Africa Oil Week is now moving to Accra from next year. Africa Energy Week remains here.
You may be aware that in the past, APPO has also been organizing what we call the CAPE: African Petroleum Congress, and Exhibition. It was stopped some three years ago. Upon assuming office as Secretary General, the first CAPE that was held was in Angola, and honestly, I didn’t like what I saw because if this is okay, then what is worth doing is worth doing well, so I didn’t continue with it.
But we’ve now agreed that these ones would remain in the regions and we are going to have a truly continental energy event, and we will be going around, not like we used to do in APPA when it goes around countries in alphabetical order. No, we are going to do rotates by regions, North Africa, Southern Africa, Western Africa, Eastern Africa and Central Africa.
When we are going to Northern Africa, we collect the countries there and ask them to choose which country is prepared to host, we will go and see if they have the right facilities to host that event.
We are going to focus not so much…; Cape Town, African Energy Week, Africa Oil Week, and MSGBC, let them do the talking, the critical thinking. We are more interested in seeing a display of technology of oil and gas that have been done indigenously in Africa, so we will be focusing on that and we’ll go round the continent. So basically, this is what we are looking at, I believe African Energy Week has done very well, and it will continue to do well. I believe also that Africa Oil Week will continue to do very well in the western part of the continent. And we’ll have these things as regional events. And then we’ll have a truly Pan-African one.
All of them, African Energy Week, Africa Oil Week, and MSGBC will all come together and support APPO. We want them to be co-owners or co-partners in this.
From a professional point of view, I would like to get your perspective; AEW is talking about ending energy poverty by 2030, looking at members of the APPO, and what they’ve done so far in the energy sector, I’d like you to give us an informed opinion of what you think about this. Is it achievable come 2030?
There is nothing unachievable about it. The first step, as I said, is ensuring that we identify the challenges that will make it impossible for us to reach that goal. The first, as we identified it in a major study conducted by APPO, is the financing of the industry, and as you can see, we have gone beyond just theory into practice, practically established an institution that we believe will make a big difference, will be a game changer in the financing of the oil and gas industry.
As I said, we are going to finance the oil and gas industry for the use of Africans. The second challenge is that of technology and expertise. APPO is leading a big drive towards the creation or establishment or identification of what you call regional centres of excellence in oil and gas, in the upstream, in the midstream, and in the downstream.
It doesn’t make sense today for us to continue each country thinking or believing that it can do, it can excel in upstream, in midstream, in downstream, in gas, no. We don’t have the resources, we don’t have the money, we don’t have the technology.
So why don’t we come together and agree that, okay, in the upstream sector, country A has gone the farthest today, why don’t we all pool our resources there to make it even excel?
Country B in downstream, it is the best.
Country C is in midstream.
Country D is in the services.
When we have done this and gradually another set, phase two, we’ll still have another set of centres of excellence, it’s not going to be just one. When we do that, we can now guarantee that we have what it takes to bring our oil and gas from the subsoil out, because those on whom we have depended in the last 70 years or more for oil and gas technology are closing down their faculties of oil and gas now, so before you know it, the technology will not move anymore. There wouldn’t be any technology or new sciences; and the day you lose that, then you’ve lost exploration, because I always say this, that when I was in secondary school, we used to be told that there was soon going to come what we call the peak oil, oil will end. So even if you go to school, you cannot get a car because cars will not be out. Between that time, 1970 something to date we have consumed so much oil, yet the world reserves of today are more than what they were in 1970. It is not that more oil has been created. The technology of finding oil has improved. So the moment that technology stagnates, then there is stagnation in finding, and that will be the end of it. So, we have to do that. The third challenge is; that we export 75% of the crude oil we produce in Africa today. We export 45% of the gas that we produce in Africa today. Those to whom we’re exporting these are now telling us they are looking for alternatives and they are determined to get it, and when they do get it, they’ll abandon our oil and gas. What happens to those treasures in the ground? The only way is for us to develop our own market. I had earlier said we have 600 million people who don’t have electricity, nearly 1 billion who don’t have access to modern energy. So it is a big fallacy to say that we don’t have the market. No. We’ve been made to believe that Africans are too poor to buy energy. I want you to show me one society in the world that has been able to lift its people from poverty to prosperity without making available to them ample energy. So the challenge is for us to empower our people to access energy.
And when you do this with nearly a billion people without access to modern energy, 600, there is a huge potential market. Develop that market and you’ll find that with the seven million barrels that we produce today, it’s not even enough for us. Once you lift people out of poverty, from being underdogs to coming to the middle class, the consumption of energy increases, the demand increases, and the resources with which to buy these things increase. So we are convinced that the way we are going, we are leading the way, and we are convinced that barring any unforeseen circumstances, we should be able to, if not immediately, by 2030, not very long after that.
Talking about developing Africans, is there any form of a deliberate strategy by APPO to promote local content, especially with the exit of the IOCs and divestments, what are the strategies on the ground for APPO to promote local content?
One of the first things we did on assumption of office as Secretary General of APPO is to, before… during APA days, we only had a meeting of experts and a meeting of ministers, and we said, no, you can’t make much progress with simply making policies, policies, policies, you need to involve those who are operating the industry, and we now created the forum of CEOs of APPO NOCs.
For the first time in 2022, chief executive officers of 15 out of the 18 APPO member country NOCs, sat together in Luanda, Angola, and got to know each other, many of them didn’t know each other, they were seeing each other for the first time.
We’ve had six meetings since that time and I’m pleased to say that the response has been very, very, positive. There was never a time we got in attendance less than 12 CEOs out of 18 and minimum, if a CEO doesn’t come, he will send his deputy. In the six meetings we’ve had, the CEOs exchanged thoughts, exchanged ideas about the challenges they face in the industry and came up with ideas of how best to handle them. That informed the creation of the forum of directors of research, innovation and development in the oil and gas industry. We created another forum for directors of training institutions of oil and gas in Africa. The objective of these two fora is essentially to work on Africans being able to have full control of the technology of that industry, of enhancing the capacity of our people to work in these fields. So, we look forward to having these original centres of excellence, these training institutions and a lot is being done. Two years ago, NOCs in African countries, each was looking to Europe, today, it has changed. The GCO of NNPC will pick up his phone and call his colleague from Angola or fly to Algiers to exchange thoughts and challenges. In the past, they would wait for Total or Chevron or Mobile, or they fly there. This is changing, Africa is changing for the better, and I assure you that the pace at which these changes are going to take place will surprise many people.
Let’s look at technology transfer; Your Excellency, you spoke earlier on, that very soon, as the IOCs are leaving, technologies will become obsolete and there is a need to develop our technology. Is there any form of deliberate attempt by APPO to see that eventually when the IOCs leave, we’ll no longer have to run to them like you mentioned? Do we have the right technicality on the ground, if we do, we’ll love to hear about it, if we don’t, what are the strategies on the ground?
First of all, let me make it very clear, there are some concepts that we use in Africa that we have no business using. “Technology transfer”. What is technology transfer? I totally disagree with that concept. Nobody will transfer technologies that they have developed and give to you, the Chinese didn’t get developed to beat Europe and America the way they are by simplicity sitting to do, no. Look, in every person that God has created; He has given every society some innate capabilities. You either bring it out of you, or you just keep it there, latent, and you rely on others.
One of the biggest problems we have on the African continent is that we are becoming more and more intellectually lazy. We are not rigorous. We would rather look to studies, and research, done outside. I talked about regional centres of excellence. They address the issues you’re talking about, the objective of these regional centres of excellence is not; you talked about local content and so on. Those can be done at the national level because, at that level, you’re just empowering a vast majority of lower artisans, etc. But some things are beyond the lower and middle operators in the industry. These are people who just sit and think of imminent challenges and try to be proactive in addressing them even before they have arrived.
I am very confident that we have enough Africans, whether on the continent or in the diaspora, to come and make Africa grow technologically, but to do that, particularly, for the diaspora, you’ll need to create the enabling environment. Our societies can be very stifling. Our rules and regulations can be very stifling. I think instead of sitting there, looking forward to bringing technologies developed from outside, let us ask ourselves what can we do to indigenize these technologies. No country, no society can transfer technology to you, and if they do, they are not helping you, because you don’t know the very foundation of that technology. That is why today when your refineries are broken, you can’t do it. You can’t fix them; you still wait for those… and the danger, especially with the energy transition, is that we have all these big, big structures, the moment those who are fabricating the spare parts decide not to continue, then these projects become just white elephants, they are there, you can’t use them. See what’s happening in Nigeria. How many refineries have been comatose for the last so many years? If we were the ones who manufactured, and fabricated those refineries, well of course I know the corruption factor is there, but it wouldn’t have been as bad as it is today.
Talking about funding, especially for research and development; oftentimes you hear especially in Africa, mostly in a country like Nigeria, saying there is not enough funding, or they can’t access funding to be able to carry out this research to develop the sector. I don’t know if there is anything on the ground from APPO to propagate or help people, especially those seeking to carry out research and development in the oil sector.
I have said it severally; I have never believed that Africa has no money, it is just a matter of prioritising. And I have also never believed that any person or society can develop solidly on the basis of aid or grant. The earlier people began to look within for the solution to their challenges, instead of looking outside for people to help them, the better. When we were going to start the African Energy Bank, many people said, where is the money going to come from? I said we don’t want money from outside until after we have started our bank.
Where will you get the bank, I said, from Africa, and I’ll give you an example of why I believe Africa is rich. I worked at the OPEC Secretariat between 2003 and 2010. When I went to OPEC in February 2003, oil prices were considered low if they went below $22 per barrel. They were considered high if they went beyond $28. So there was an effort, they called it a price ban. Just make sure the oil price is between these two bands. Between 2003 and 2008, in a matter of five years, oil prices jumped from $22 to nearly $150 per barrel. At the same time, global production increased by about 3 million barrels. Every single oil-producing country increased production.
Nigeria produced 2.5 million barrels in 2005, the highest volume it has ever produced. The question is, if we all know that oil and gas are the mainstays of our economy, what did we do to make sure that part of that windfall was devoted to financing that industry so that we don’t continue to be dependent on foreign financing? That wasn’t done, instead, we used it on so many things, and we’ve continued to be dependent on foreign financing. I’ll give you another example. In 2020, when COVID struck, by the middle of the year, when many countries were preparing their budget for 2021, not a single country in Africa, not even Saudi, budgeted, expecting oil prices to go beyond $40 for 2021. Remember, in April, the oil price was in the negative, they were saying, come and take a barrel, we will give you $37 to go and find a place to dump it. The reason is, that they don’t have storage, and if they retained it, they were going to be forced to shut some wells, and it’s dangerous to shut a well because you come to bring it back, you may lose it forever. So they’d rather pay to get rid of it than to shut that well.
So many people were afraid. By September 2021, oil prices had reached almost $80 per barrel. What did we do with the extra money that we got that was not budgeted for? So the point is, it’s a question of prioritizing, if you prioritize, you’ll be able to get the money.
In the case of Nigeria, I think Nigeria has been very innovative, you know, there’s a special fund for local content at the Nigerian Content Development and Management Board. They make sure that if you have projects that will help the industry, help Nigeria to be in a better position to control the industry, they fund you, and I think they do this in partnership with the Bank of Industry or something. I wish many other countries would do this.
Before we close, Sir, yesterday I was discussing with one of the participants at the AEW and we were talking about the African Energy Bank, he said eventually, when it takes off, it may become a burden and African Energy Bank may not be able to finance some of the projects, especially as it relates to energy and he was proposing that there should be a bank for the downstream, midstream, upstream and the rest of them. That it shouldn’t just be one bank taking care of everything energy in Africa. So I would like to hear your view, is there any plan to put this in place?
I think it would be too ambitious to start dissipating your energy and your little resources. We have started the African Energy Bank; if over time we have enough money, it is possible they can say that, okay, this will focus on midstream, downstream, etc. but for now; I told you we are going for $5 billion. If you are to divide it into three, that’s about how much? 1.8 per member or 1.7 for each of the streams, it won’t go anywhere.
For now, I think this is good, we have no problem if, in the future, people are going to come up with specialized sector-focused banks, that would be fine, we have no problem with that, but for now, we feel happy that when we came up with this idea two years ago, people thought we were crazy, it has become a reality. So it’s very possible some people also come up with this, we will support them.
Do you have any closing remarks, Your Excellency?
What I would like to say is that Africans should learn to have confidence in themselves. The era of dependence on outsiders to address the challenges that face us should be put behind us, and this is particularly to with our leaders and our elites, we have what it takes to change our continent.
But because the consumption pattern and the lifestyle of our people is so much targeted at Western consumption…look, we sell our oil and our gas not because we don’t need it, but because people are selling it to get dollars to be able to buy things that are mostly conspicuous consumption. You go to our homes, you go to our offices, you see the cars we ride, there is absolutely no reason to spend the kind of money that our governments are spending on what they call… you know, tell yourselves that in the next 5 to 15 years, we are going to make sure that we’ve made the necessary sacrifice, we want to look within and see what we can do. That’s how the Chinese made it, they literally closed their borders. They sent their children to America and Europe, “Go and learn, come back, bring the technology, open it, and now I want you to do your own”. That’s exactly what they did, but we bring ready to consume. Thank you.