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Energy transition opens  financing options for banks, investors, says NNPC 

Banks and investors will go for opportunity to invest in the Nigerian oil and gas sector as the industry prepares for energy transition, Group Executive Director, Upstream of the Nigerian National Petroleum Company Ltd, Adokiye Tombomieye, has said.

He spoke at the 2022 Annual Conference of the Association of Professional Women Engineers (APWEN) on the theme: “Just Energy Transition Strategy: An Enabler For Sustainable Development in Nigeria.”, said the coming of renewable energy will open new funding options for banks and savvy investors.

According to Tombomieye,  the aggressive move towards a carbon zero emission will boost the ability of Nigerian oil and gas companies to attract funding for their multi-billion-dollar gas projects.

In Nigeria, big oil company like Shell plans to divest around $2.3 billion in assets, Eni’s asset divestment is about $5 billion and ExxonMobil would offload $15 billion in assets.

Local oil company, Seplat intends to acquire a subsidiary of ExxonMobil for about $1.3 billion, but this has been put on hold by a suit won by the NNPC Ltd.

Tombomieye said usage of renewables; solar, wind, tidal wave, natural gas remains a very important transition fuel for sustainable development and Nigeria has a healthy balance of gas and oil.

“The good news is that financial Institutions will fund gas projects. Therefore, leveraging on gas development will be a way for Nigeria to navigate the energy transition mantra.

“Energy transition also comes with the opportunities of carbon credits and because Nigeria produced gas and oil, we can market our carbon which will also be an incentive for us to process funding from Financial Institutions,” he said.

According to him, the country’s energy transition will create significant investment opportunities such as the establishment and expansion of industries related to solar energy, hydrogen, and electric vehicles.

He said that Nigeria has declared the years 2021-2030 as the Decade of Gas which is a clear indication of the country’s resolve to drive economic growth with natural gas exploitation.

At the COP26 in Glasgow, Africa leaders argued for a just energy transition as the continent alongside other ‘victims’ have chosen 2060 for carbon zero.

Funding for crude projects by banks had depreciated over dollar scarcity, while big oil companies are diversifying to renewables.

Tombomieye said, “The Energy transition will continue to impact the ability of Nigeria and oil and gas companies to attract capital as banks and investors prioritize Environmental, Social, and Governance factors and are moving away from funding hydrocarbon projects.

“Globally, the transportation sector generates the largest share of greenhouse gas emissions which primarily comes from burning fossil fuels for our cars, trucks, ships, trains, and planes; 90 per cent of the fuel used for transportation is petroleum based, which includes primarily gasoline and diesel.”

According to him, about 60 per cent of the fossil fuel market in Nigeria is driven by the transportation industry and this is a very significant consumption percentage for fossil fuels.

He added that the replacement of Internal Combustion Engine with Electric Vehicles (EVs) will automatically affect the market demand for fossil fuel vehicles.

He said, “With about 60 per cent of your fossil fuel (crude oil) demand impacted, it will significantly and negatively impact crude oil production.”
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