Oil & Energy
Why Energy Giants Won’t Turn Their Backs On Oil
As governments worldwide put increasing pressure on oil and gas companies to decarbonize, many have responded by pledging to expand their renewable energy portfolios and cut emissions in fossil fuel operations.
However, despite big promises, little progress is being seen by most oil and gas majors, which suggests some might have so far overstated their commitment to a green transition.
In 2020, during the COVID-19 pandemic, when the global demand for oil sunk to a record low, several oil and gas companies turned their attention to renewable energy. Companies increasingly looked to diversify their energy portfolios to avoid the economic hit of such as major shift in demand in future years.
Losses totalled over $100 billion according to estimates. The CEO of Exxon Mobil, Darren Woods, recently explained, “Investors were focused on what I would say was the prevailing narrative around it’s all moving to wind and solar. I had a lot of pressure to get into the wind and solar business”.
Instead of venturing into an area in which the company had little experience, Exxon eventually invested in hydrogen projects and lithium extraction. Some companies did invest in solar and wind projects, such as U.K.-based BP and Shell.
However, the post-pandemic period has been a time of renewed demand for fossil fuels, as commercial activities, trade, and leisure and business travel resumed.
The shift in market demand has encouraged many oil and gas companies to double down on their fossil fuel investments, as well as boost output by developing operations in new oil regions of the world, such as Africa and The Caribbean.
Many of the world’s biggest oil and gas companies have diversified their energy mix to include renewable energy, mineral mining, and clean tech projects.
Nevertheless, most have returned to focus primarily on their oil and gas business while the global demand remains strong. Viviano, a managing partner at the energy investment firm Kimmeridge, stated, “If you look at the relative shareholder returns, the market’s been sending a very clear signal that it wants energy companies to focus on their core competencies… That doesn’t mean abandoning the energy transition, but it just means being more pragmatic about it”.
Despite big promises to support a global green transition from several state and private actors at last year’s COP28 climate summit, global carbon dioxide emissions from fossil fuels are on track to reach a record 37.4 billion metric tonnes this year, marking a 0.8 percent increase on 2023 levels, according to the Global Carbon Project – although emissions are expected to fall this year in the United States and Europe.
At present, China contributes around 32 percent of global emissions, while the U.S. accounts for 13 percent, India 8 percent, and the European Union 6 percent.
While the increase in the global renewable energy capacity is expected to support a decrease in emissions across several countries, emissions from fossil fuel projects are not decreasing at the rate required to meet Paris Agreement targets in the coming years.
The text of the global stocktake that many oil companies agreed upon at COP28 “calls on parties to contribute…in a nationally determined manner” to transition “away from fossil fuels in energy systems”.
However, it does not establish any targets or progress milestones to meet between now and 2050. It also encourages the incorporation of carbon capture and storage (CCS) technologies into fossil fuel operations, rather than calling for a move away from fossil fuels.
While many oil and gas companies are investing heavily in decarbonization efforts, the International Energy Agency (IEA) believes this will not be enough to advance the fight against climate change.
The IEA said the oil and gas companies had to let go of “the illusion that implausibly large amounts of carbon capture are the solution”.
With 1,700 coal, oil, and gas lobbyists invited to attend COP29 this month, many environmentalists worry that these actors will dominate the conference with vague pledges that will likely not translate into action if experiences from the past are repeated.
The lobbyists outnumber the delegations of nearly every country at the summit. Meanwhile, just days before COP29 commenced, Azerbaijan’s Deputy Energy Minister and Chief Executive of the summit, Elnur Soltanov, was caught on camera agreeing to facilitate oil deals at the negotiations.
An activist with the environmental group U.K. Youth Climate Coalition, Sarah McArthur, stated, “Cop29 kicked off with the revelation that fossil fuel deals were on the agenda, laying bare the ways that industry’s constant presence has delayed and weakened progress for years.
“The fossil fuel industry is driven by their financial bottom line, which is fundamentally opposed to what is needed to stop the climate crisis, namely, the urgent and just phaseout of fossil fuels”.
Some of the world’s biggest oil and gas companies have invested in decarbonization efforts as well as green energy and clean tech projects in recent years, largely in response to pressure to support a global green transition.
However, most oil majors continue to view fossil fuel operations as their main economic activity, with several expecting to maintain high oil and gas output for decades to come.
Meanwhile, the heavy involvement of the oil and gas industry in the recent COP climate summits suggests that fossil fuels continue to dominate global energy, despite efforts by several governments and environmental actors to decarbonize, increase their green energy capacity, and tackle climate change.
By: Felicity Bradstock
Nigerian Ministers, industry leaders, stakeholders in the oil and gas industry, and members of both chambers of the National Assembly have been confirmed to be in attendance at the 2024 edition of the annual Practical Nigerian Content (PNC) Conference and Exhibition slated for the first week of December at the Nigerian Content Tower, Yenagoa, Bayelsa State.
The theme of the event is “Deepening the Next Frontier for Nigerian Content Implementation”.
A statement from the Directorate of Corporate Communications and Zonal Coordination of the Nigerian Content Development Management Board (NCDMB) made available to newsmen says that the annual conference and exhibition is a signature event hosted by the Board in partnership with DMG Events.
According to the statement, the 2024 edition of the event will commence today, with a golf tourney at the Henry Seriake Golf and Country Club, Yenagoa and a welcome reception in the evening to be hosted by Coleman Wires and Cables at the newly opened Best Western Hotel, Swali, Yenagoa.
The Tide was also informed that the formal opening ceremony will begin at 9am tomorow with speeches by the Executive Secretary of the NCDMB, Engr. Felix Omatsola Ogbe.
Goodwill messages, according to the Board’s statement, would be delivered by the Chief Executive, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, the Chief Executive, Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA), Engr. Farouk Ahmed, and the Group Chief Executive Officer, Nigerian National Petroleum Company Ltd, Mr. Mele Kolo Kyari.
Other top officials slated to speak at the 2024 PNC opening ceremony are the Minister of State for Petroleum Resources (Oil), Sen. Heineken Lokpobiri, the Minister of State for Petroleum Resources (Gas), Hon. Ekperikpe Ekpo, and their counterpart from the Ministry of Power, Mr. Adebayo Adelabu.
The Chairman, Senate Committee on Local Content, Senator Natasha Akpoti-Uduaghan and the Chairman, House of Representatives Committee on Nigerian Content Development and Monitoring, Honourable Boma Goodhead, are also billed to speak at the opening day.
The first panel discussion will analyse “The Next Frontier for Nigerian Content: Divestments and Offshore Opportunities”, and the cast will include the Director, Project Certification and Authorisation, NCDMB, Engr. Abayomi Bamidele, alongside the Chairman, Chevron Nigeria, Mr. Jim Swartz, the Executive Director, TotalEnergies E&P Nigeria, Mr. Obi Imemba, the Group Chief Executive, Oando PLC, Mr. Wale Tinubu, and the Managing Director, Aradel Holdings, Engr. Adegbite Falade.
The second panel will discuss “Evaluating Financial Strategies for Increased Local Content Implementation”.
Some of the discussants will include l; the Secretary General, African Petroleum Producers’ Organisation (APPO), Dr. Omar Farouk Ibrahim; the Managing Director, Bank of Industry (BOI), Dr. Olasupo Olusi; and the Director, Finance & Personnel Management, NCDMB, Ifeanyi Ukoha.
While the second day of the conference will also feature panel discussions on topical industry issues as “Nigerian Content Beyond Borders”, “Nigerian Content from the Grass Roots: Community Capacity Development”, and “From Policy to Practice: Strengthening Domestication for Economic Development”.
Major highlights of the 2024 PNC will include the unveiling of new operational policies by the NCDMB and exhibition of projects and capacities by international and indigenous operating and service oil and gas companies.
Delegates attending this year’s event can also look forward to the gala dinners to be hosted by the Bayelsa State Government on Tuesday, and by the Nigeria LNG Ltd on Wednesday, in addition to the site visit on Thursday morning to the logistics base of First Marine and Engineering Services Ltd located at Swali, Yenagoa.
By: Ariwera Ibibo-Howells, Yenagoa
The Nigerian National Petroleum Company Limited (NNPC) has identified poor corporate governance, transparency and efficiency as affecting operations in Nigeria’s oil and gas industry.
The company, therefore, said it has become imperative for upstream stakeholders in the nation’s oil and gas industry to strengthen their corporate governance structure.
Executive Vice President (EVP), Upstream, Udobong Ntia, made the remark while speaking at the Upstream Governance, Risk and Compliance Workshop, themed: “Enhancing Governance, Risk and Compliance in Nigeria’s Upstream Sector” in Lagos.
Corporate governance challenges in the nation’s oil sector are multifaceted and complex and one major issue is the lack of transparency and accountability in the operations of oil companies, particularly Multinational Corporations (MNCs), the Company observed.
Ntia emphasised that governance, risk management, and compliance were at the heart of NNPC’s ‘core values of integrity, excellence and sustainability’.
The Executive Vice President commended the upstream leadership and regulators for supporting the initiative to assemble stakeholders to discuss issues that have a bearing on individual and collective success towards attaining the clear mandate of sustainably ramping up the nation’s crude oil production.
He also reiterated his readiness to provide enablers within his purview that would accelerate the implementation of initiatives that would enhance governance, risk management and compliance in the upstream sub-sector.
A statement by the Chief Corporate Communications Officer of the company, Olufemi Soneye, said the workshop had in attendance NNPC’s Chief Compliance Officer, Nasir Usman and NNPC’s Chief Upstream Investment Officer, Bala Wunti.
It was also attended by representatives of industry regulators such as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC); the Nigerian Content Development and Monitoring Board (NCDMB), and over 20 upstream operators from International Oil Companies (IOCs) in Nigeria.
Energy giant, TotalEnergies, is set to approve a $750 million gas project in Nigeria next year, indicating potential progress in the country’s bid to attract more investment in its hydrocarbon sector.
The shallow-water project, developed in partnership with a local firm, aims to further enhance gas supply to the Liquefied Natural Gas (LNG) facility.
Senior Vice President of Africa (Exploration and Production) TotalEnergies, Mike Sangster, disclosed this at the France-Nigeria business forum in Paris, Friday.
“We have another dry gas project called Ima, which we hope to sanction next year for about $750 million.
“There’s still more to be done in terms of regulation, simplifying, and accelerating the process, but we have appreciated some of the changes that have been made over the past year.
“They have given us now the incentive or the motivation to go ahead and renew our investments in Nigeria so that we can stop the decline and start to increase production”, Sangster stated.
He advocated for a further easing of local content regulations to attract international contractors with expertise in deep-water projects back to Nigeria, noting that this would foster competition and revive investments that have been suspended.
Earlier this year, TotalEnergies pledged around $500 million to a joint venture with the state-owned Nigerian National Petroleum Company (NNPC) Limited to develop the Ubeta onshore field.
With an expected output of 300 million cubic feet per day, this project is set to strengthen the gas supply to the Nigerian Liquefied Natural Gas (NLNG) plant.
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