Ejiofor Alike
The Managing Director and Chief Executive Officer of Seplat Petroleum Development Company Plc, Mr. Austin Avuru has stressed the need for crude oil price to stabilise around $60 per barrel threshold, saying that $80 oil and above could be detrimental to investments.
Avuru has also called on African players in the oil and gas sector to focus on domestic energy security as the multinational companies are moving investment funds from oil and gas into the renewable energy sources.
He argued that even though the multinational majors are shifting to the new frontiers of renewable energy, oil and gas will continue to remain relevant to Africa, pointing out that it will take another 20 years for these new frontiers being developed by the majors to be available for Africa’s consumption after they are fully developed.
Avuru cited the case of electric car, which he said, will take additional 20 years to reach Africa after it is fully developed in 2035.
In a special remark while delivering the keynote speech at the just concluded West African International Petroleum Exhibition and Conference (WAIPEC) hosted in Lagos by the Petroleum Technology Association of Nigeria (PETAN), the Seplat boss described what is generally regarded as low oil prices as the real balancing.
According to him, when crude oil approaches $80, $90 and $100, it encourages operators to embark on massive investments in unconventional sources of energy, which create glut in the oil market and crash the price.
Avuru added that when the price of oil is too low as in February 2016 when it was $26 per barrel, a lot of projects are deferred, adding that the $69 oil being witnessed currently is as a result of projects that were deferred.
“I was telling somebody that I am praying that it doesn’t get to $80 per barrel because it will draw us out. We are safe at $60. But by real balancing what I am referring to is the fact that when the prices get to certain threshold, certain forms of unconventional become attractive and over a period of time, it crashes the price. Conversely, when the prices are too low as we saw $26 in February 2016, a lot of projects are deferred. The $69 we are seeing today is as a result of projects that were deferred,†Avuru explained.
Avuru added that as the multinational companies are moving resources away from oil and gas to the renewable energy, African players should recognise that these new frontiers, when fully developed by the multinationals, would take another 20 years to get to Africa.
To this end, the Seplat boss suggested that as the majors are moving resources into these new frontiers, Africa’s focus in the next five years should be domestic energy security.
According to him, domestic energy security will help Africa to sustain consumption of energy until the new frontiers get to the continent.
“So, as emphasis and investment funds are moving away into new frontiers of renewable energy, we as Africans need to recognise that a lot of those new frontiers, when they fully developed, will take another 20 years to return to Africa for our consumption. Therefore, was investments are going into these new frontiers, we here in Africa, will emphasise domestic energy security so that our own, internally, we can survive,†he explained.
