1.0 PREAMBLE:
On Thursday, September 14, 2023, a galaxy of stars from the petroleum industry, government, and academia gathered in the Emmanuel Egbogah Auditorium at the Emerald Energy Institute (EEI), University of Port Harcourt, for the 12th edition of the Emmanuel Egbogah Legacy Lecture Series. This hybrid edition of the annual event fell on a day that would have been his 81st birthday. Incidentally, the day also represents the fifth annual lecture since the passing of Dr. Egbogah in 2018. The 2023 Lecture was organized by the Emmanuel Egbogah Foundation in partnership with the Nigeria Council of the Society of Petroleum Engineers (SPENC). The aim is to interrogate the differing geopolitical inclinations and perspectives on climate change and energy transition arguments.
The hybrid event was hosted by the 9th Vice Chancellor of the University of Port Harcourt in the Emmanuel Egbogah Auditorium at the Emerald Energy Institute, Port Harcourt. In his tributes, the Chief Host, the 9th Vice Chancellor, University of Port Harcourt, Professor Owunari Georgewill, graciously and fondly echoed the fact that Dr. Egbogah left footprints on the University of Port Harcourt campus as evidenced by his funding of the Emerald Energy Institute Building now christened as the Emmanuel Egbogah Building; the Emmanuel Egbogah Chair in Petroleum Engineering, the Chirota and Emmanuel Egbogah Distinguished Professor, and the Biodiversity Laboratory.
The 7th Vice Chancellor of the University of Port Harcourt and the Emmanuel Egbogah Chair in Petroleum Engineering, Eminent Professor Joseph Ajienka, welcome the delegates and sponsors on behalf of the Chairman of the Emmanuel Egbogah Foundation, Dr Emmy Egbogah, who was unavoidably absent. The EEF Chair declared that Professor Emmanuel Egbogah built an illustrious career, amassed several decades of investing in capacity building for the oil and gas, to ensure the economic future of Nigeria would remain bright. Indeed, the Iroko who left the scene begot many other Iroko trees in the forest perpetuating the “Iroko” legacy. Professor Ajienka concluded his remarks as the host and the Vice Chair of EEF graciously offered deep appreciation to the Chief Host, Professor Owunari Georgewill, the keynote speaker, Professor Chidi Ibe, the Chairman of the 2023 Lecture Series, Mr. Victor Sodje and all the sponsors, Professor Adewale Dosunmu, the Chair of the Panel and his panelists, distinguished guests, faculty, students, and staff to the event marking the fifth anniversary of the passing to glory of Professor Emmanuel Egbogah.
2.0 KEYNOTE MESSAGE — GEOPOLITICS OF CLIMATE CHANGE AND ENERGY TRANSITION
According to Professor Chidi Ibe, the keynote speaker, there is little doubt that the global landscape has been warming, and this year 2023 has seen record-high temperatures in unusual places. Sea surface temperatures have risen 0.51 degrees Celsius since monitoring began, and sea ice has decreased by 15 percent. The changing patterns in the climate (Climate Change) wrought by this warming trend have caused multifaceted impacts on our natural environment – inducing extreme weather events (intense floods and prolonged droughts), accelerating sea level rise, intensifying wildfires, influencing water accessibility, distorting agricultural production, provoking human displacements, even impacting our travel and commuting trends, et cetera.
The Intergovernmental Panel on Climate Change (IPCC), the leading international body for the assessment of climate change, issued its first damning report (AR1of1990), prompting world leaders to rally under the auspices of the United Nations, to adopt the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. These treaties set binding targets for reducing Green House Gas (CHG) emissions. In 2009, US President Barrack Obama called Climate Change, “the greatest challenge of our times”. With Obama’s leadership, world leaders gathered in Paris in 2015, to sign the landmark Paris Climate Agreement, with the intention of reining in GHG emissions. Today, climate change is driving policy shifts, reshaping industrial and commercial activities, and paving the way for novel opportunities in all spheres of energy development and agribusiness.
The IPCC concluded in AR 4, 2007 that net zero CO2 by 2050 is needed to remain consistent with 1.5 degrees C. This was premised on the belief that energy transition from one dominant fuel to another takes 50 to 60 years, and as prices fall, the fuel fades gradually. Thus, n this Energy Transition, decarbonization was a distant consideration at the beginning of the conversation, if at all. It is then curious, when, and how the need to decarbonize became an existential issue, which has created a stampede towards net zero emissions and a world largely without fossil fuels by 2050.
To underline the hypocrisy of the industrialized nations, the 2021 Climate Change Conference in Glasgow (COP 26), the first review of the Paris Agreement, intended to consolidate the targets, turned out a sham. Major coal producers like India, China, Australia, Indonesia, and Poland watered down the resolution on coal, just as major oil producers like Saudi Arabia, the United States, and the big International Oil Companies applied enough pressure to torpedo any serious threat to oil production in the resolutions. The meeting ended with tepid resolutions addressing energy subsidies.
Useful lessons were drawn from the transition from coal to petroleum (which has been ongoing for over a century), which should focus more on best practices like carbon capture utilization and storage (CUSS) technology. This can help the world achieve net zero without threatening the petroleum industry. The CCUS is a suite of technologies that can help reduce reliance on fossil fuels and achieve net zero emissions, but there was little appetite to explore these in Glasgow. A new platform from these technologies could boost the development of carbon-captured batteries, and coal and natural gas power generation could be two percent more efficient.
The industrial West opted for decarbonization because they wanted to settle an old score and dislodge the dominant oil producers from the Middle East and elsewhere, as punishment for the 1970s oil shock arising from the Arab oil embargo. They also wanted to prevent the Organisation of Petroleum Exporting Countries (OPEC), which became dominant in the international oil market after the 1970s oil shock, from having such influence on oil supplies as to re-enact another oil shock. The reality is that fossil fuels are not going away for at least 100 years, and if F-DLC coatings were adopted globally, they would noticeably curtail carbon emissions and water usage for the existing power infrastructure.
The USA is not going to give in to any semblance of control by China over their energy security, and by implication, economic lifeline. China is leading the global development of renewable technologies, and exporting complete sets of technologies to the European Union. The USA refused to ratify the KYOTO PROTOCOL, and pulled out of the Paris Climate Agreement 2017, citing unfair geopolitical advantage by “developing powers” (translation: China and maybe India) that would threaten US economic dominance. We all watched how the European Union countries panicked when Russia invaded Ukraine and a chain of events led to cutting energy supplies from Russia. Faced with energy penury, they switched back to abandoned sources of energy like coal, diesel plants, and nuclear, just to escape the stranglehold and geopolitical implications of dependence on Russia. Was the WORLD no longer in peril from the continued use of these dirty and risky fuels? Why did they seem to abandon the rest of the world to a catastrophic future they had so elaborately painted?
The first trigger to the world of renewables and alternative energy was steeped in Geo-politics which played out exactly half a century ago. The Arab armies attacked Israel on Yom Kippur Day, 1973, and the Western allies provided intelligence that turned near defeat into victory. To retaliate for what they saw as betrayal by the West, the Arabs imposed a total oil embargo on the West. The 1973 oil price shock and stock market crash knocked the wind out of the global economy and helped trigger the fall of the UK government of the day. In response to the high oil prices of the 1970s, industrial nations switched from oil to coal, natural gas, or nuclear power, and commercial exploration developed major non-OPEC oilfields in Siberia, Alaska, the North Sea, and the Gulf of Mexico. They poured billions of Dollars into the quest for functional renewable energy technologies. As oil prices picked up again into the 2000s, the industrial nations lamented the high cost of oil to their industrial production costs. They therefore pushed for drastic actions to “kill fossil fuels” during the successive COPS under UNFCC.
While the industrialized countries negotiated the Paris Climate Agreement, they had the benefit of history and recollection of how the oil boycott of 1973 humbled and humiliated them. Unfortunately, the developing countries especially African countries, came to these meetings with a naive notion of a charitable world. Again, many countries of the G-77 had no expertise or money to send experts to these meetings and were at best indifferent to the outcome that bedevilled petroleum. Fossil fuels power our industries and homes and provide raw materials for the manufacture of a vast array of products and goods. It also underpins our modern transportation system, which would grind to a halt without them. For now, renewable energy is unable to power container ships. Electric cars are expensive and need lifestyle changes to catch on. Intermittency problems plague two of the most promising renewable sources – solar and wind, known as Variable Renewable Energy (VRE) or non-dispatchable energy. Key questions have remained unanswered relating to the cost of renewables integration into power grids, policy and regulatory issues, and the availability of suitable technologies (e.g., energy storage technologies).
While Africa has 20 percent of the world’s population and ample resources, it attracts only two percent of global Clean Energy Funds. To meet development ambitions, as well as international energy access according to climate goals, energy investments in Africa need to more than double by 2030, with nearly 2/3 going to clean energy. Several industry insiders have called for caution in the single-minded pursuit of decarbonization:
– Prof David Popp, of the Department of Public Administration and International Affairs at Maxwell School, Syracuse University warned that an all-out ban on gasoline-powered vehicles would be going too far.
– Shell Plc’s new boss Waal Sawan has said that cutting oil and gas production is not healthy and that the world will need oil and gas for a long time to come.
– Exxon Mobil is moving its assets from the USA, Brazil, and jurisdictions with more stringent environmental safeguards to Guyana, where new laws on local content offer IOCs brighter prospects for the future of low-cost, low-carbon oil operations that will not dry up any time soon.
– Meanwhile, experts agree that the oil and gas industry is one industry, and traditional oil and gas companies are going to deliver new and emerging technologies, such as hydrogen production, offshore wind, as well as carbon capture usage and storage.
3.0 CLIMATE CHANGE AND PETROLEUM ISSUES—PERSPECTIVES FROM THE PANELISTS
The follow-up panel session chaired by Professor Wale Dosunmu, raised several issues, including the challenge of multiple taxation to operators in the petroleum industry; oppressive fiscal terms, poor governance issues, and abandonment of Nigeria by the IOCs. The panelists include Victor Kenyon, MD Kenyon International, Port Harcourt, Engr. (Mrs) Oluseyi Afolabi, Principal Consultant/CEO, Reservoir and Facilities Solutions Ltd, Lagos, and Dr. A. Valentine Felix, Executive Chairman, Entek Integrated Resources Limited, Lagos.
Mrs. Oluseyi Afolabi, a Panel Speaker, spoke strongly about the Petroleum Industry Act. She opined that the recent exodus of IOCs, especially from onshore fields in the Niger Delta can be attributed to the PIA2021. She describes the law as oppressive and asphyxiating for business, with the IOCs paying as much as 93 percent of their earnings to the Federal Government Pre PIA. Many of the IOCs are now moving to jurisdictions like Guyana and Namibia, where they are getting much better fiscal terms.
Emeritus Professor Wumi Iledare, however, expressed a contrary view, arguing that Guyana and many Anfrican countries just discovering oil are where Nigeria used to be sixty years ago, and naturally they will be eager to virtually hand over the acreages to the IOCs just as Nigeria did at the beginning. According to Iledare and Dr. Victor Ekpenyong, an oil well control expert, Nigeria is now a mature oil province with enough expertise and competence to develop and enforce competitive fiscal laws. Iledare did agree with Mrs. Afolabi that volume matters if value is diminishing. In Nigeria of today both value per unit and volume are running against the traffic according to Iledare. Victor suggested that more oil and gas production is needed to generate more revenue and fast track energy transition in Nigeria. According to him, conversation around climate change and energy transition seems to be skewed against Africa despite minimal contribution of the continent to global warming. Thus, Dr. Ekpenyong advocated for a strategic approach to managing energy resources with emphasis on optimal resource extraction and utilizations for sustainable development.
Regarding fiscal terms in the PIA Iledare contended, they are at par with the deepwater 1993 PSCs, which the IOCs lapped up. They are also at par, and competitive, relative to any other mature oil jurisdiction, he concluded. In fact, it is not unusual for IOC to divest from mature fields and move on to the prolific frontier basins, where rewards are commensurate with risked investments. A classic example is the exodus of IOCs from the Permian Basin in Texas to the prolific deepwater assets in the Gulf of Mexico. Reacting to the perspectives offered on the panel regarding the commercialization propensity in the PIA, Dr. Joseph Ellah, a former GGM in the old NNPC, expressed his apprehensiveness with passion. He opined that the commercialization process enshrined in the PIA is flawed with regards to the mechanics of ownership transfer of petroleum resources. Perhaps, his apprehension emanates for the prebendal privatization processes observed since 1999.
4.0 CONCLUDING REMARKS
Energy plays a critical role in driving economic growth. Why are we being told to ditch our petroleum industry and leap into the new world of Renewable technologies without anyone showing us any credible path to achieving this Eldorado? Thus, Energy Transition must not compromise energy supply reliability. What we have we must hold! For Petroleum-dependent economies, a wholesale embrace of the Global Energy Transition with all its willy-nilly fixed limits and deadlines, will be an EMBRACE OF DEATH.
In the 1980s when the Asian Countries were steaming ahead, in their industrialization plans, there was a slight slump in the global economy and the soothsayers predicted a decline in the rate of growth in the intensity of solid minerals raw material use, which led to the coining of the term, “DEMATERIALIZATION”. That prediction did not materialize. The Asian countries held their nerve and resolve and rather increased their investments. They went on to smile all the way to the bank and put their countries on a solid path to sustainable industrial development. They are the present-day Asian Tigers!
African Leaders in Nairobi gathered to chart a new course for climate action, but ended up accepting someone else’s song, and whipped out their begging bowls for aid, while almost every African country has joined or has every prospect of joining the petroleum producers club. Given the evolving realities about the continued viability of petroleum, is it not time for developing countries to pause and reflect on ways to navigate the Energy Transition Trilemma or perhaps Evolving Energy Opportunities? Increasing calls from global think tanks to developing countries to embark on a twin transition from petroleum to the so-called mineral energy materials as export substitution for their economies is “pie in the sky”, because it takes five to 25 years to set up a viable mining industry.
Petroleum, indeed, is too big to fail or vanish! Nigeria, with a developed petroleum industry, can take the lead in changing the status quo and enlist the AU now that it has been granted G-20 Membership, to test the waters! Nigeria should ramp up production and build up her oil and gas reserves, reduce production cost per barrel, build internal refining capacity, intensify gas-to-power schemes, maximize gas export, and expand domestic use; and build industrial /manufacturing capacity using oil and gas as feedstock.
CLIMATE CHANGE AND THE GEOPOLITICS OF ENERGY TRANSITION: PROCEEDINGS OF THE 12TH EMMANUEL EGBOGAH LEGACY LECTURE
1.0 PREAMBLE:
| O |
n Thursday, September 14, 2023, a galaxy of stars from the petroleum industry, government, and academia gathered in the Emmanuel Egbogah Auditorium at the Emerald Energy Institute (EEI), University of Port Harcourt, for the 12th edition of the Emmanuel Egbogah Legacy Lecture Series. This hybrid edition of the annual event fell on a day that would have been his 81st birthday. Incidentally, the day also represents the fifth annual lecture since the passing of Dr. Egbogah in 2018. The 2023 Lecture was organized by the Emmanuel Egbogah Foundation in partnership with the Nigeria Council of the Society of Petroleum Engineers (SPENC). The aim is to interrogate the differing geopolitical inclinations and perspectives on climate change and energy transition arguments.
The hybrid event was hosted by the 9th Vice Chancellor of the University of Port Harcourt in the Emmanuel Egbogah Auditorium at the Emerald Energy Institute, Port Harcourt. In his tributes, the Chief Host, the 9th Vice Chancellor, University of Port Harcourt, Professor Owunari Georgewill, graciously and fondly echoed the fact that Dr. Egbogah left footprints on the University of Port Harcourt campus as evidenced by his funding of the Emerald Energy Institute Building now christened as the Emmanuel Egbogah Building; the Emmanuel Egbogah Chair in Petroleum Engineering, the Chirota and Emmanuel Egbogah Distinguished Professor, and the Biodiversity Laboratory.
The 7th Vice Chancellor of the University of Port Harcourt and the Emmanuel Egbogah Chair in Petroleum Engineering, Eminent Professor Joseph Ajienka, welcome the delegates and sponsors on behalf of the Chairman of the Emmanuel Egbogah Foundation, Dr Emmy Egbogah, who was unavoidably absent. The EEF Chair declared that Professor Emmanuel Egbogah built an illustrious career, amassed several decades of investing in capacity building for the oil and gas, to ensure the economic future of Nigeria would remain bright. Indeed, the Iroko who left the scene begot many other Iroko trees in the forest perpetuating the “Iroko” legacy. Professor Ajienka concluded his remarks as the host and the Vice Chair of EEF graciously offered deep appreciation to the Chief Host, Professor Owunari Georgewill, the keynote speaker, Professor Chidi Ibe, the Chairman of the 2023 Lecture Series, Mr. Victor Sodje and all the sponsors, Professor Adewale Dosunmu, the Chair of the Panel and his panelists, distinguished guests, faculty, students, and staff to the event marking the fifth anniversary of the passing to glory of Professor Emmanuel Egbogah.
2.0 KEYNOTE MESSAGE — GEOPOLITICS OF CLIMATE CHANGE AND ENERGY TRANSITION
According to Professor Chidi Ibe, the keynote speaker, there is little doubt that the global landscape has been warming, and this year 2023 has seen record-high temperatures in unusual places. Sea surface temperatures have risen 0.51 degrees Celsius since monitoring began, and sea ice has decreased by 15 percent. The changing patterns in the climate (Climate Change) wrought by this warming trend have caused multifaceted impacts on our natural environment – inducing extreme weather events (intense floods and prolonged droughts), accelerating sea level rise, intensifying wildfires, influencing water accessibility, distorting agricultural production, provoking human displacements, even impacting our travel and commuting trends, et cetera.
The Intergovernmental Panel on Climate Change (IPCC), the leading international body for the assessment of climate change, issued its first damning report (AR1of1990), prompting world leaders to rally under the auspices of the United Nations, to adopt the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. These treaties set binding targets for reducing Green House Gas (CHG) emissions. In 2009, US President Barrack Obama called Climate Change, “the greatest challenge of our times”. With Obama’s leadership, world leaders gathered in Paris in 2015, to sign the landmark Paris Climate Agreement, with the intention of reining in GHG emissions. Today, climate change is driving policy shifts, reshaping industrial and commercial activities, and paving the way for novel opportunities in all spheres of energy development and agribusiness.
The IPCC concluded in AR 4, 2007 that net zero CO2 by 2050 is needed to remain consistent with 1.5 degrees C. This was premised on the belief that energy transition from one dominant fuel to another takes 50 to 60 years, and as prices fall, the fuel fades gradually. Thus, n this Energy Transition, decarbonization was a distant consideration at the beginning of the conversation, if at all. It is then curious, when, and how the need to decarbonize became an existential issue, which has created a stampede towards net zero emissions and a world largely without fossil fuels by 2050.
To underline the hypocrisy of the industrialized nations, the 2021 Climate Change Conference in Glasgow (COP 26), the first review of the Paris Agreement, intended to consolidate the targets, turned out a sham. Major coal producers like India, China, Australia, Indonesia, and Poland watered down the resolution on coal, just as major oil producers like Saudi Arabia, the United States, and the big International Oil Companies applied enough pressure to torpedo any serious threat to oil production in the resolutions. The meeting ended with tepid resolutions addressing energy subsidies.
Useful lessons were drawn from the transition from coal to petroleum (which has been ongoing for over a century), which should focus more on best practices like carbon capture utilization and storage (CUSS) technology. This can help the world achieve net zero without threatening the petroleum industry. The CCUS is a suite of technologies that can help reduce reliance on fossil fuels and achieve net zero emissions, but there was little appetite to explore these in Glasgow. A new platform from these technologies could boost the development of carbon-captured batteries, and coal and natural gas power generation could be two percent more efficient.
The industrial West opted for decarbonization because they wanted to settle an old score and dislodge the dominant oil producers from the Middle East and elsewhere, as punishment for the 1970s oil shock arising from the Arab oil embargo. They also wanted to prevent the Organisation of Petroleum Exporting Countries (OPEC), which became dominant in the international oil market after the 1970s oil shock, from having such influence on oil supplies as to re-enact another oil shock. The reality is that fossil fuels are not going away for at least 100 years, and if F-DLC coatings were adopted globally, they would noticeably curtail carbon emissions and water usage for the existing power infrastructure.
The USA is not going to give in to any semblance of control by China over their energy security, and by implication, economic lifeline. China is leading the global development of renewable technologies, and exporting complete sets of technologies to the European Union. The USA refused to ratify the KYOTO PROTOCOL, and pulled out of the Paris Climate Agreement 2017, citing unfair geopolitical advantage by “developing powers” (translation: China and maybe India) that would threaten US economic dominance. We all watched how the European Union countries panicked when Russia invaded Ukraine and a chain of events led to cutting energy supplies from Russia. Faced with energy penury, they switched back to abandoned sources of energy like coal, diesel plants, and nuclear, just to escape the stranglehold and geopolitical implications of dependence on Russia. Was the WORLD no longer in peril from the continued use of these dirty and risky fuels? Why did they seem to abandon the rest of the world to a catastrophic future they had so elaborately painted?
The first trigger to the world of renewables and alternative energy was steeped in Geo-politics which played out exactly half a century ago. The Arab armies attacked Israel on Yom Kippur Day, 1973, and the Western allies provided intelligence that turned near defeat into victory. To retaliate for what they saw as betrayal by the West, the Arabs imposed a total oil embargo on the West. The 1973 oil price shock and stock market crash knocked the wind out of the global economy and helped trigger the fall of the UK government of the day. In response to the high oil prices of the 1970s, industrial nations switched from oil to coal, natural gas, or nuclear power, and commercial exploration developed major non-OPEC oilfields in Siberia, Alaska, the North Sea, and the Gulf of Mexico. They poured billions of Dollars into the quest for functional renewable energy technologies. As oil prices picked up again into the 2000s, the industrial nations lamented the high cost of oil to their industrial production costs. They therefore pushed for drastic actions to “kill fossil fuels” during the successive COPS under UNFCC.
While the industrialized countries negotiated the Paris Climate Agreement, they had the benefit of history and recollection of how the oil boycott of 1973 humbled and humiliated them. Unfortunately, the developing countries especially African countries, came to these meetings with a naive notion of a charitable world. Again, many countries of the G-77 had no expertise or money to send experts to these meetings and were at best indifferent to the outcome that bedevilled petroleum. Fossil fuels power our industries and homes and provide raw materials for the manufacture of a vast array of products and goods. It also underpins our modern transportation system, which would grind to a halt without them. For now, renewable energy is unable to power container ships. Electric cars are expensive and need lifestyle changes to catch on. Intermittency problems plague two of the most promising renewable sources – solar and wind, known as Variable Renewable Energy (VRE) or non-dispatchable energy. Key questions have remained unanswered relating to the cost of renewables integration into power grids, policy and regulatory issues, and the availability of suitable technologies (e.g., energy storage technologies).
While Africa has 20 percent of the world’s population and ample resources, it attracts only two percent of global Clean Energy Funds. To meet development ambitions, as well as international energy access according to climate goals, energy investments in Africa need to more than double by 2030, with nearly 2/3 going to clean energy. Several industry insiders have called for caution in the single-minded pursuit of decarbonization:
– Prof David Popp, of the Department of Public Administration and International Affairs at Maxwell School, Syracuse University warned that an all-out ban on gasoline-powered vehicles would be going too far.
– Shell Plc’s new boss Waal Sawan has said that cutting oil and gas production is not healthy and that the world will need oil and gas for a long time to come.
– Exxon Mobil is moving its assets from the USA, Brazil, and jurisdictions with more stringent environmental safeguards to Guyana, where new laws on local content offer IOCs brighter prospects for the future of low-cost, low-carbon oil operations that will not dry up any time soon.
– Meanwhile, experts agree that the oil and gas industry is one industry, and traditional oil and gas companies are going to deliver new and emerging technologies, such as hydrogen production, offshore wind, as well as carbon capture usage and storage.
3.0 CLIMATE CHANGE AND PETROLEUM ISSUES—PERSPECTIVES FROM THE PANELISTS
The follow-up panel session chaired by Professor Wale Dosunmu, raised several issues, including the challenge of multiple taxation to operators in the petroleum industry; oppressive fiscal terms, poor governance issues, and abandonment of Nigeria by the IOCs. The panelists include Victor Kenyon, MD Kenyon International, Port Harcourt, Engr. (Mrs) Oluseyi Afolabi, Principal Consultant/CEO, Reservoir and Facilities Solutions Ltd, Lagos, and Dr. A. Valentine Felix, Executive Chairman, Entek Integrated Resources Limited, Lagos.
Mrs. Oluseyi Afolabi, a Panel Speaker, spoke strongly about the Petroleum Industry Act. She opined that the recent exodus of IOCs, especially from onshore fields in the Niger Delta can be attributed to the PIA2021. She describes the law as oppressive and asphyxiating for business, with the IOCs paying as much as 93 percent of their earnings to the Federal Government Pre PIA. Many of the IOCs are now moving to jurisdictions like Guyana and Namibia, where they are getting much better fiscal terms.
Emeritus Professor Wumi Iledare, however, expressed a contrary view, arguing that Guyana and many Anfrican countries just discovering oil are where Nigeria used to be sixty years ago, and naturally they will be eager to virtually hand over the acreages to the IOCs just as Nigeria did at the beginning. According to Iledare and Dr. Victor Ekpenyong, an oil well control expert, Nigeria is now a mature oil province with enough expertise and competence to develop and enforce competitive fiscal laws. Iledare did agree with Mrs. Afolabi that volume matters if value is diminishing. In Nigeria of today both value per unit and volume are running against the traffic according to Iledare. Victor suggested that more oil and gas production is needed to generate more revenue and fast track energy transition in Nigeria. According to him, conversation around climate change and energy transition seems to be skewed against Africa despite minimal contribution of the continent to global warming. Thus, Dr. Ekpenyong advocated for a strategic approach to managing energy resources with emphasis on optimal resource extraction and utilizations for sustainable development.
Regarding fiscal terms in the PIA Iledare contended, they are at par with the deepwater 1993 PSCs, which the IOCs lapped up. They are also at par, and competitive, relative to any other mature oil jurisdiction, he concluded. In fact, it is not unusual for IOC to divest from mature fields and move on to the prolific frontier basins, where rewards are commensurate with risked investments. A classic example is the exodus of IOCs from the Permian Basin in Texas to the prolific deepwater assets in the Gulf of Mexico. Reacting to the perspectives offered on the panel regarding the commercialization propensity in the PIA, Dr. Joseph Ellah, a former GGM in the old NNPC, expressed his apprehensiveness with passion. He opined that the commercialization process enshrined in the PIA is flawed with regards to the mechanics of ownership transfer of petroleum resources. Perhaps, his apprehension emanates for the prebendal privatization processes observed since 1999.
4.0 CONCLUDING REMARKS
Energy plays a critical role in driving economic growth. Why are we being told to ditch our petroleum industry and leap into the new world of Renewable technologies without anyone showing us any credible path to achieving this Eldorado? Thus, Energy Transition must not compromise energy supply reliability. What we have we must hold! For Petroleum-dependent economies, a wholesale embrace of the Global Energy Transition with all its willy-nilly fixed limits and deadlines, will be an EMBRACE OF DEATH.
In the 1980s when the Asian Countries were steaming ahead, in their industrialization plans, there was a slight slump in the global economy and the soothsayers predicted a decline in the rate of growth in the intensity of solid minerals raw material use, which led to the coining of the term, “DEMATERIALIZATION”. That prediction did not materialize. The Asian countries held their nerve and resolve and rather increased their investments. They went on to smile all the way to the bank and put their countries on a solid path to sustainable industrial development. They are the present-day Asian Tigers!
African Leaders in Nairobi gathered to chart a new course for climate action, but ended up accepting someone else’s song, and whipped out their begging bowls for aid, while almost every African country has joined or has every prospect of joining the petroleum producers club. Given the evolving realities about the continued viability of petroleum, is it not time for developing countries to pause and reflect on ways to navigate the Energy Transition Trilemma or perhaps Evolving Energy Opportunities? Increasing calls from global think tanks to developing countries to embark on a twin transition from petroleum to the so-called mineral energy materials as export substitution for their economies is “pie in the sky”, because it takes five to 25 years to set up a viable mining industry.
Petroleum, indeed, is too big to fail or vanish! Nigeria, with a developed petroleum industry, can take the lead in changing the status quo and enlist the AU now that it has been granted G-20 Membership, to test the waters! Nigeria should ramp up production and build up her oil and gas reserves, reduce production cost per barrel, build internal refining capacity, intensify gas-to-power schemes, maximize gas export, and expand domestic use; and build industrial /manufacturing capacity using oil and gas as feedstock.
CLIMATE CHANGE AND THE GEOPOLITICS OF ENERGY TRANSITION: PROCEEDINGS OF THE 12TH EMMANUEL EGBOGAH LEGACY LECTURE
1.0 PREAMBLE:
| O |
n Thursday, September 14, 2023, a galaxy of stars from the petroleum industry, government, and academia gathered in the Emmanuel Egbogah Auditorium at the Emerald Energy Institute (EEI), University of Port Harcourt, for the 12th edition of the Emmanuel Egbogah Legacy Lecture Series. This hybrid edition of the annual event fell on a day that would have been his 81st birthday. Incidentally, the day also represents the fifth annual lecture since the passing of Dr. Egbogah in 2018. The 2023 Lecture was organized by the Emmanuel Egbogah Foundation in partnership with the Nigeria Council of the Society of Petroleum Engineers (SPENC). The aim is to interrogate the differing geopolitical inclinations and perspectives on climate change and energy transition arguments.
The hybrid event was hosted by the 9th Vice Chancellor of the University of Port Harcourt in the Emmanuel Egbogah Auditorium at the Emerald Energy Institute, Port Harcourt. In his tributes, the Chief Host, the 9th Vice Chancellor, University of Port Harcourt, Professor Owunari Georgewill, graciously and fondly echoed the fact that Dr. Egbogah left footprints on the University of Port Harcourt campus as evidenced by his funding of the Emerald Energy Institute Building now christened as the Emmanuel Egbogah Building; the Emmanuel Egbogah Chair in Petroleum Engineering, the Chirota and Emmanuel Egbogah Distinguished Professor, and the Biodiversity Laboratory.
The 7th Vice Chancellor of the University of Port Harcourt and the Emmanuel Egbogah Chair in Petroleum Engineering, Eminent Professor Joseph Ajienka, welcome the delegates and sponsors on behalf of the Chairman of the Emmanuel Egbogah Foundation, Dr Emmy Egbogah, who was unavoidably absent. The EEF Chair declared that Professor Emmanuel Egbogah built an illustrious career, amassed several decades of investing in capacity building for the oil and gas, to ensure the economic future of Nigeria would remain bright. Indeed, the Iroko who left the scene begot many other Iroko trees in the forest perpetuating the “Iroko” legacy. Professor Ajienka concluded his remarks as the host and the Vice Chair of EEF graciously offered deep appreciation to the Chief Host, Professor Owunari Georgewill, the keynote speaker, Professor Chidi Ibe, the Chairman of the 2023 Lecture Series, Mr. Victor Sodje and all the sponsors, Professor Adewale Dosunmu, the Chair of the Panel and his panelists, distinguished guests, faculty, students, and staff to the event marking the fifth anniversary of the passing to glory of Professor Emmanuel Egbogah.
2.0 KEYNOTE MESSAGE — GEOPOLITICS OF CLIMATE CHANGE AND ENERGY TRANSITION
According to Professor Chidi Ibe, the keynote speaker, there is little doubt that the global landscape has been warming, and this year 2023 has seen record-high temperatures in unusual places. Sea surface temperatures have risen 0.51 degrees Celsius since monitoring began, and sea ice has decreased by 15 percent. The changing patterns in the climate (Climate Change) wrought by this warming trend have caused multifaceted impacts on our natural environment – inducing extreme weather events (intense floods and prolonged droughts), accelerating sea level rise, intensifying wildfires, influencing water accessibility, distorting agricultural production, provoking human displacements, even impacting our travel and commuting trends, et cetera.
The Intergovernmental Panel on Climate Change (IPCC), the leading international body for the assessment of climate change, issued its first damning report (AR1of1990), prompting world leaders to rally under the auspices of the United Nations, to adopt the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. These treaties set binding targets for reducing Green House Gas (CHG) emissions. In 2009, US President Barrack Obama called Climate Change, “the greatest challenge of our times”. With Obama’s leadership, world leaders gathered in Paris in 2015, to sign the landmark Paris Climate Agreement, with the intention of reining in GHG emissions. Today, climate change is driving policy shifts, reshaping industrial and commercial activities, and paving the way for novel opportunities in all spheres of energy development and agribusiness.
The IPCC concluded in AR 4, 2007 that net zero CO2 by 2050 is needed to remain consistent with 1.5 degrees C. This was premised on the belief that energy transition from one dominant fuel to another takes 50 to 60 years, and as prices fall, the fuel fades gradually. Thus, n this Energy Transition, decarbonization was a distant consideration at the beginning of the conversation, if at all. It is then curious, when, and how the need to decarbonize became an existential issue, which has created a stampede towards net zero emissions and a world largely without fossil fuels by 2050.
To underline the hypocrisy of the industrialized nations, the 2021 Climate Change Conference in Glasgow (COP 26), the first review of the Paris Agreement, intended to consolidate the targets, turned out a sham. Major coal producers like India, China, Australia, Indonesia, and Poland watered down the resolution on coal, just as major oil producers like Saudi Arabia, the United States, and the big International Oil Companies applied enough pressure to torpedo any serious threat to oil production in the resolutions. The meeting ended with tepid resolutions addressing energy subsidies.
Useful lessons were drawn from the transition from coal to petroleum (which has been ongoing for over a century), which should focus more on best practices like carbon capture utilization and storage (CUSS) technology. This can help the world achieve net zero without threatening the petroleum industry. The CCUS is a suite of technologies that can help reduce reliance on fossil fuels and achieve net zero emissions, but there was little appetite to explore these in Glasgow. A new platform from these technologies could boost the development of carbon-captured batteries, and coal and natural gas power generation could be two percent more efficient.
The industrial West opted for decarbonization because they wanted to settle an old score and dislodge the dominant oil producers from the Middle East and elsewhere, as punishment for the 1970s oil shock arising from the Arab oil embargo. They also wanted to prevent the Organisation of Petroleum Exporting Countries (OPEC), which became dominant in the international oil market after the 1970s oil shock, from having such influence on oil supplies as to re-enact another oil shock. The reality is that fossil fuels are not going away for at least 100 years, and if F-DLC coatings were adopted globally, they would noticeably curtail carbon emissions and water usage for the existing power infrastructure.
The USA is not going to give in to any semblance of control by China over their energy security, and by implication, economic lifeline. China is leading the global development of renewable technologies, and exporting complete sets of technologies to the European Union. The USA refused to ratify the KYOTO PROTOCOL, and pulled out of the Paris Climate Agreement 2017, citing unfair geopolitical advantage by “developing powers” (translation: China and maybe India) that would threaten US economic dominance. We all watched how the European Union countries panicked when Russia invaded Ukraine and a chain of events led to cutting energy supplies from Russia. Faced with energy penury, they switched back to abandoned sources of energy like coal, diesel plants, and nuclear, just to escape the stranglehold and geopolitical implications of dependence on Russia. Was the WORLD no longer in peril from the continued use of these dirty and risky fuels? Why did they seem to abandon the rest of the world to a catastrophic future they had so elaborately painted?
The first trigger to the world of renewables and alternative energy was steeped in Geo-politics which played out exactly half a century ago. The Arab armies attacked Israel on Yom Kippur Day, 1973, and the Western allies provided intelligence that turned near defeat into victory. To retaliate for what they saw as betrayal by the West, the Arabs imposed a total oil embargo on the West. The 1973 oil price shock and stock market crash knocked the wind out of the global economy and helped trigger the fall of the UK government of the day. In response to the high oil prices of the 1970s, industrial nations switched from oil to coal, natural gas, or nuclear power, and commercial exploration developed major non-OPEC oilfields in Siberia, Alaska, the North Sea, and the Gulf of Mexico. They poured billions of Dollars into the quest for functional renewable energy technologies. As oil prices picked up again into the 2000s, the industrial nations lamented the high cost of oil to their industrial production costs. They therefore pushed for drastic actions to “kill fossil fuels” during the successive COPS under UNFCC.
While the industrialized countries negotiated the Paris Climate Agreement, they had the benefit of history and recollection of how the oil boycott of 1973 humbled and humiliated them. Unfortunately, the developing countries especially African countries, came to these meetings with a naive notion of a charitable world. Again, many countries of the G-77 had no expertise or money to send experts to these meetings and were at best indifferent to the outcome that bedevilled petroleum. Fossil fuels power our industries and homes and provide raw materials for the manufacture of a vast array of products and goods. It also underpins our modern transportation system, which would grind to a halt without them. For now, renewable energy is unable to power container ships. Electric cars are expensive and need lifestyle changes to catch on. Intermittency problems plague two of the most promising renewable sources – solar and wind, known as Variable Renewable Energy (VRE) or non-dispatchable energy. Key questions have remained unanswered relating to the cost of renewables integration into power grids, policy and regulatory issues, and the availability of suitable technologies (e.g., energy storage technologies).
While Africa has 20 percent of the world’s population and ample resources, it attracts only two percent of global Clean Energy Funds. To meet development ambitions, as well as international energy access according to climate goals, energy investments in Africa need to more than double by 2030, with nearly 2/3 going to clean energy. Several industry insiders have called for caution in the single-minded pursuit of decarbonization:
– Prof David Popp, of the Department of Public Administration and International Affairs at Maxwell School, Syracuse University warned that an all-out ban on gasoline-powered vehicles would be going too far.
– Shell Plc’s new boss Waal Sawan has said that cutting oil and gas production is not healthy and that the world will need oil and gas for a long time to come.
– Exxon Mobil is moving its assets from the USA, Brazil, and jurisdictions with more stringent environmental safeguards to Guyana, where new laws on local content offer IOCs brighter prospects for the future of low-cost, low-carbon oil operations that will not dry up any time soon.
– Meanwhile, experts agree that the oil and gas industry is one industry, and traditional oil and gas companies are going to deliver new and emerging technologies, such as hydrogen production, offshore wind, as well as carbon capture usage and storage.
3.0 CLIMATE CHANGE AND PETROLEUM ISSUES—PERSPECTIVES FROM THE PANELISTS
The follow-up panel session chaired by Professor Wale Dosunmu, raised several issues, including the challenge of multiple taxation to operators in the petroleum industry; oppressive fiscal terms, poor governance issues, and abandonment of Nigeria by the IOCs. The panelists include Victor Kenyon, MD Kenyon International, Port Harcourt, Engr. (Mrs) Oluseyi Afolabi, Principal Consultant/CEO, Reservoir and Facilities Solutions Ltd, Lagos, and Dr. A. Valentine Felix, Executive Chairman, Entek Integrated Resources Limited, Lagos.
Mrs. Oluseyi Afolabi, a Panel Speaker, spoke strongly about the Petroleum Industry Act. She opined that the recent exodus of IOCs, especially from onshore fields in the Niger Delta can be attributed to the PIA2021. She describes the law as oppressive and asphyxiating for business, with the IOCs paying as much as 93 percent of their earnings to the Federal Government Pre PIA. Many of the IOCs are now moving to jurisdictions like Guyana and Namibia, where they are getting much better fiscal terms.
Emeritus Professor Wumi Iledare, however, expressed a contrary view, arguing that Guyana and many Anfrican countries just discovering oil are where Nigeria used to be sixty years ago, and naturally they will be eager to virtually hand over the acreages to the IOCs just as Nigeria did at the beginning. According to Iledare and Dr. Victor Ekpenyong, an oil well control expert, Nigeria is now a mature oil province with enough expertise and competence to develop and enforce competitive fiscal laws. Iledare did agree with Mrs. Afolabi that volume matters if value is diminishing. In Nigeria of today both value per unit and volume are running against the traffic according to Iledare. Victor suggested that more oil and gas production is needed to generate more revenue and fast track energy transition in Nigeria. According to him, conversation around climate change and energy transition seems to be skewed against Africa despite minimal contribution of the continent to global warming. Thus, Dr. Ekpenyong advocated for a strategic approach to managing energy resources with emphasis on optimal resource extraction and utilizations for sustainable development.
Regarding fiscal terms in the PIA Iledare contended, they are at par with the deepwater 1993 PSCs, which the IOCs lapped up. They are also at par, and competitive, relative to any other mature oil jurisdiction, he concluded. In fact, it is not unusual for IOC to divest from mature fields and move on to the prolific frontier basins, where rewards are commensurate with risked investments. A classic example is the exodus of IOCs from the Permian Basin in Texas to the prolific deepwater assets in the Gulf of Mexico. Reacting to the perspectives offered on the panel regarding the commercialization propensity in the PIA, Dr. Joseph Ellah, a former GGM in the old NNPC, expressed his apprehensiveness with passion. He opined that the commercialization process enshrined in the PIA is flawed with regards to the mechanics of ownership transfer of petroleum resources. Perhaps, his apprehension emanates for the prebendal privatization processes observed since 1999.
4.0 CONCLUDING REMARKS
Energy plays a critical role in driving economic growth. Why are we being told to ditch our petroleum industry and leap into the new world of Renewable technologies without anyone showing us any credible path to achieving this Eldorado? Thus, Energy Transition must not compromise energy supply reliability. What we have we must hold! For Petroleum-dependent economies, a wholesale embrace of the Global Energy Transition with all its willy-nilly fixed limits and deadlines, will be an EMBRACE OF DEATH.
In the 1980s when the Asian Countries were steaming ahead, in their industrialization plans, there was a slight slump in the global economy and the soothsayers predicted a decline in the rate of growth in the intensity of solid minerals raw material use, which led to the coining of the term, “DEMATERIALIZATION”. That prediction did not materialize. The Asian countries held their nerve and resolve and rather increased their investments. They went on to smile all the way to the bank and put their countries on a solid path to sustainable industrial development. They are the present-day Asian Tigers!
African Leaders in Nairobi gathered to chart a new course for climate action, but ended up accepting someone else’s song, and whipped out their begging bowls for aid, while almost every African country has joined or has every prospect of joining the petroleum producers club. Given the evolving realities about the continued viability of petroleum, is it not time for developing countries to pause and reflect on ways to navigate the Energy Transition Trilemma or perhaps Evolving Energy Opportunities? Increasing calls from global think tanks to developing countries to embark on a twin transition from petroleum to the so-called mineral energy materials as export substitution for their economies is “pie in the sky”, because it takes five to 25 years to set up a viable mining industry.
Petroleum, indeed, is too big to fail or vanish! Nigeria, with a developed petroleum industry, can take the lead in changing the status quo and enlist the AU now that it has been granted G-20 Membership, to test the waters! Nigeria should ramp up production and build up her oil and gas reserves, reduce production cost per barrel, build internal refining capacity, intensify gas-to-power schemes, maximize gas export, and expand domestic use; and build industrial /manufacturing capacity using oil and gas as feedstock.
OMOWUMI O. ILEDARE, PhD,
Snr. Fellow USAEE, Fellow NIPetE,
Fellow EI. Professor Emeritus,
LSU Center for Energy Studies,
Baton Rouge, USA & Executive Director Emmanuel Egbogah Foundation Abuja, Nigeria