How Africa can drive investments in petroleum sector –Funmi Ogbue, CEO, Zigma Limited

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From Uche Usim, Abuja

Mrs. Funmi Ogbue, Chief Executive Officer of Zigma Limited, an oil and gas company, and the national president, Women In Energy Network (WIEN), is very passionate about developing local capacity needed to drive growth in the petroleum sector. With that, the continent will quit salivating over offshore handouts and assistance and take the driver’s seat in piloting the affairs of the sector, even on the global stage.

To this end, Ogbue, an organizational change management expert, is championing a crusade that seeks to have more women players in the oil and gas sector, while not ditching the message of having more Nigerians call the shots in the industry.

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She is calling on Nigerians and Africans in general to rise up to the challenges stunting the growth of the sector by cementing local collaboration.

Ogbue is also the founder and CEO of Nigeria’s leading organizational support company, Jake Riley, as well as founder, Support Our Troops, a foundation she established to promote citizen support for members of the military and their families.

Though she is a household name in the Nigerian oil and gas sector, the daring woman is never reluctant to break into new frontiers.

In this interview held on the sidelines of the Nigeria International Energy Summit (NIES) 2022, Ogbue outlines ways Nigeria and Africa can drive investments in the energy sector, especially now that the call for energy transition has reached a crescendo.

How can Africa better compete on the world stage and attract the investment needed for growth of the continent?

We keep saying that “the world is a global village”, but how often have we told ourselves a deep truth which is Africa, particularly the Sub-Saharan parts, have not benefited from this saying; especially if we are to use other continents as a comparison mechanism.

This point will be further emphasized by the World Bank recognizing that sub-Saharan Africa’s activity stood at 2% of total world trade, even though trade flows have expanded by 10% per year since 2000.

I have found that we often dwell on the potential of Africa. We are very good at providing possible solutions. However, translating these solutions via actions and transparent tracking of such actions, to harness the touted potential is nowhere near good enough.

Attracting more investments into our continent will require bold actions, which involve enabling policies that can lower transport and energy costs, eliminating formal and informal barriers to trade, increasing the flexibility of labour markets, and ensuring effective competition policies.

Rwanda, a country lacking natural resources, has seen its Foreign Direct Investment increased more than threefold. This has been credited to improving its regulatory structure for business, increasingly sophisticated regional and global manufacturing supply chains demand cross-border predictability, transparency, reliability and accountability. I have highlighted the Rwanda example to illustrate that attracting investment is very doable within our continent.

Many countries within our continent, like ours, have vast natural resources.

There is an estimated 125 billion barrels of oil reserves and 500t SCF of Gas on this continent. A lot of African countries are discovering new oil. Liquified natural gas (LNG) possesses the highest expansion potential in global markets. Notwithstanding the 2050 net emission targets, I don’t see why this can’t be used as leverage to develop our continent.

I also think it is clear that Africa needs infrastructure. Future growth will depend on productivity increases and higher private investment to bridge the infrastructure gap. We won’t be able to compete with other regions without roads and universal access to electricity.

In emphasizing the electricity bit, only one in three Africans has access to electricity, and those with power access typically pay up to seven times more than consumers elsewhere. At present, the concentration of investments in the continent are relatively short term which reflects investors’ reluctance to engage the continent over a longer time frame. We must take actions to address same.

There also needs to be demonstrable demand for our goods and products. Most  times, the available labor force determine the quality of the output we present to the international scene. We have the numbers in this continent – in terms of young demographics. We must now devise a way (through policies) to shape these people and then leverage on that to provide international value.

We must make sure that the shaping is done in an inclusive way – I’m speaking specifically about women – who tend to be left behind. We must take good  examples from other continent to set and achieve diversity targets and to present quality work force to improve outputs capable of international demand.

I think we must start being effective with our actions to attract investment into the continent.

From the standpoint of operators, what policy enhancements should government focus on to reinforce growth in the industry in the face of energy transition realities?

It is apparent that the energy transition is happening. Current operators are adopting strategies to ensure the transition happens aligning with the net zero emissions target mission.

We have seen breakthroughs across the auto, power and lighting sectors. Electric vehicles are increasingly becoming popular in the world. The growth is happening even in places that governments lag behind.

Despite the apparent growth, it can be reinforced and made faster if it is led by government’s policy. To illustrate, Norway is a seller of more electric vehicles than petrol, diesel and hybrid vehicles. This is backed by their government’s target to end internal combustion engine sales in 2025. There is that clarity from the government for the industry to follow.

Despite the Norway example, we must acknowledge that the country depends on oil and gas. We have been doing so for some time and for that reason, will take us much more time to switch onto the Energy Lane.

We must also acknowledge that the law regulating the industry is still young, barely into its first-year anniversary. In that context, you can understand the reluctance  by the government to immediately declare a policy that will disrupt an industry the country is dependent on.

Notwithstanding the foregoing, the government cannot afford to lag for long, especially considering we have already made a pledge towards the global target.

We must face this reality and come up with a strategic direction that the industry, especially operators need to see to guide future oil field assets strategy. Any policy the government plan to roll out must conform to the pillars of a just transition. We know that a good transition will create jobs, but those jobs must be made available in places where impact is had in the society. The just transition is a local challenge, and political and business leaders should treat it as such. In that regard, adopting mechanisms for ensuring effective consultation and transparency.

From the perspective of the current and future operators, I believe they still see a clear industry direction aligned with their local, business and especially political goals. Operators – who are key stakeholders in the industry – thrive on being guided by regulatory clarity. This will inform investment strategies especially that of long term.

Governments can reinforce growth in other ways such as incentivizing the just transition. Operators in many outperforming economies face fewer regulatory and tax barriers compared with companies in other countries. This, in turn, encourages jobs and business creation and improved efficiency.

In all these, it would be interesting to note how the industry will handle the transition process and we necessarily would prefer a just transition through proactive government policies.

What is WIEN doing to improve women participation in the petroleum sector?

WIEN is advocating for the increase of women in the energy industry and has set an inclusivity target of 35% by 2025.

Women, to date, are scarce in the technical fields – which are the core for future energy executives.

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So, the time has come to strategically harness the huge potential women bring to the table both in the energy industry and other economic ventures.

The majority of women are employed in administrative, medical, human capital development, public affairs and legal departments. But the industry needs to be more future forward. We could take cues from our counterparts in the fintech and banking sectors. In buttressing the point about numbers, a study conducted by McKinsey & Company notes that, in Africa, women make up a 9% of senior management positions in the energy sector, with gender diversity decreasing with seniority. Women make up less than 8% of technical jobs in oil and gas.

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Women in the Industry, whether entrepreneurs or employees, are nowhere near enough especially now that the industry needs all hands-on deck to achieve the forecasted growth. Attracting women either via the corporate employee route or by encouraging entrepreneurs into the industry will be key.

Again, another McKinsey & Company research submission states that the problem of untapped female talent is not unique to oil & gas, but it is more acute.

When compared with 18 other industries, oil & gas was least in female participation at entry level. The oil and gas industry must be intentional about setting up diversity targets across all levels be it at entry levels, senior leaders, board and management.

There is need for the promotion of incentives for employing women or subcontracting to women-owned firms; and promoting joint ventures and alliances that include women-owned firms.

We also call on organizations to help achieve the desired level of inclusivity in the industry and on the flipside, women in the industry need to be alert to opportunities by preparing themselves to be able to capitalize on available opportunities. I encourage women to use the tools at our disposal such as the $40m Women in Oil and Gas Intervention Fund deployed by the Nigerian Content Development and Monitoring Board (NCDMB) and Nigeria Export-Import Bank.

There will always be the need to discuss the role of women to achieve industry growth.

Women are not new to the industry; we play all sort of roles from the governance aspect to the entrepreneurial and then the corporate employees’ aspect. Women have been involved in the industry just as long as men have, although not in as great numbers.

Entrepreneurships have a huge potential for employment and wealth generation, but the participation of entrepreneurs in this capital-intensive industry has remained insignificant. A significant gap exists in opportunities for entrepreneurs in oil & gas, and it is even more accentuated for women-owned businesses that generally have fewer resources to compete.

The African women are however natural entrepreneurs so there is the need to step up our support system to ensure there are more in the industry. The industry must be nurturing. There needs to be a support system that intentionally identifies, promotes, develops, and sponsors women. The support system should include more gender targeted training and certification programme, access to market opportunities and funds such as the one the NCDMB has put in place where collateral and business track record is less tedious. There is need to ensure that there is a gender-balanced future focused pipeline for the churning out of female entrepreneurs just like the the fintech and banking sectors are doing.

How do you assess the industry generally?

The world is still recovering from the effects of the recent past which is the COVID-19 pandemic. Thanks to our brilliant scientists and governments, the world has witnessed the administration of over 3.2 billion (and counting) dozes of COVID-19 vaccines. There is fair optimism that the industry will witness some level of familiar normalcy. This will in turn enable all countries to fully re-open their economies and bring their energy industries back up to full speed.

Due principally to the climate change issues, many of the world’s leaders have pledged their countries’ support to reach net zero emission within national boundaries by 2050, with ambitious interim goals by 2035. This will necessarily have a long-term impact on the global economy.

The global economy has, for the most part, recovered. Experts in the industry expectto see growth of about 5.5% this year – on a global level. Bringing the forecast closer to home, experts have made an optimistic forecast of 4% growth, this year. This will be interesting to watch considering that international oil companies are divesting some of their assets in Nigeria.

The Organization for Petroleum Exporting Countries (OPEC) forecast that the demand for oil will rise by 6.0 mb/d. Both the economy and oil demand are expected to see accelerated growth in the second half of this year. This was however disclosed with a caveat of uncertainties such as: elevated risk of inflation due to massive financial stimulus programme, uneven vaccine rollouts, the variants of COVID-19 and the energy transition.

The unpredictability and volatility brought on by the pandemic has inevitably intensified discussions related to energy transition. The uncertainties are further typified by calls for investments in oil and gas to be immediately discontinued – which in my opinion will prove disruptive considering that countries such as Nigeria rely on the Oil and gas industry.

In any case, the fact is that the oil and gas industry have an important role to play in the energy transition. To achieve the forecasted (and targeted) growth for the industry would require ALL hands-on deck.

COVID-19 and the Nigerian economy

For manufacturers and other allied businesses, the disruption in the supply chain as a result of the coronavirus pandemic is already taking a toll on raw materials needed for production. But the impact of the spread of the virus on the global oil sector has been particularly severe.

Nigeria, a major exporter of crude oil, has been unfortunately caught in the midst of the unfolding consequences of COVID-19.

So, the country has every cause to be concerned as the continuous drop in the price of crude oil would take a heavy toll on the nation’s economy because oil and gas account for over 90 per cent of Nigeria’s foreign exchange earnings and more than 60 per cent of its revenue.

India, Spain, Netherlands, France and many Asian countries including China who are major trade partners and buyers of Nigeria’s oil recorded cases of the coronavirus and the disease has impacted negatively on their economies. Nigeria would lose billions from crude oil sales as prices continue to fall.

So, what should the government be doing at this time? I think it’s time to focus on domestic use of our crude. We need to use the crude to provide electricity, gas for factories, cooking, cars, this will significantly boost our production capabilities and enable manufacturing. I think the government should also deregulate the downstream sector and relax the terms for deepwater development. We need to open up our economy to allow it grow and meet the demands of its growing population. Investors should truly be welcome, and the government can focus on providing essential social services such as security, healthcare and let the private sector do what it does best. 

Targeted tax incentives and social transfers at this time is critical to help people transition from a government driven economy to a private sector driven economy and to minimize the impact of COVID-19 on the most vulnerable businesses and citizens. I would like to encourage the government to support businesses at this time so they can minimise personnel lay off .

Similarly, reducing the misuse of public finances through commitment to transparency, opening up budgets, and strengthening anti-corruption institutions should be a priority during and post COVID-19.

Energy transition

The world is said to be moving in the direction of alternative and clean energy and there are already predictions that with current trends in technology and environmental concerns, over the next 20 to 30 years, there will be significant energy transition from fossil fuels. Though I do think Africa should be given a “holiday” to allow us to develop our economies as the renewables are difficult to scale and commercialise to the kinds of quantities we require.

But make no mistake about it, despite the ravaging effects of the coronavirus and attendant impact on oil prices, the search for oil is still ongoing even though it has been slowed down by the twin impact of the virus and drop in price. The virus has forced companies to slow or halt physical operations, but this challenge has not stopped drilling activities. Companies are however re-negotiating rates of service companies.

If you have noticed, the trend in oil discovery continued into the year 2020, after 2019 proved to be a banner year for hydrocarbon discoveries.

Nigeria recently announced discovery of one billion barrels of crude oil in the northeast region after a year of intense drilling.

However, there have been several predictions that Nigeria’s future in the post-oil world looks rather bleak and the inability of the country to innovate as the world heads towards the post-oil economy could spell doom for her.

Therefore, for Nigeria to avoid this impending doom, the much talked about plans to diversify the economy away from oil must become realistic now.

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