-Felix Douglas
The Centre for Petroleum Information (CPI) anchored recently, Petroleum Policy Roundtable which is an event to pull together brightest of minds on issues that touch on the future of Nigeria.
The event emphasised the role of CPI as the leading think tank for the energy industry in Nigeria.
CPI has been working continuously over the last 26 years towards ensuring that the industry is profiled and has the right data, knowledge to move operations.
The theme was “Learning and Finding Energy Opportunities amid Disrupted Global Supply Chains.”
In his welcome address, Engineer Afolabi Oladele, asserted that it’s only when preparation meets with opportunities that there will be spectacular results. Over the years, this practice has translated into business successes like MTNs, Aradel, among others where people invested.
Engr. Oladele stated further that the “holy book itself says in clear terms, the race is not always to the strong and the battle to the mighty. Time and chance happens to them all, and he who is prepared when that fleeting opportunity comes is the victorious one, if anything has demonstrated that in the time in which we are, is this disruption that is triggered on the whole world.”
No one would have imagined that the war that started on February 26 will still be on till now. Today is July 31, and there is no end to it. The volatility in terms of prices, have demonstrated clearly that the prepared are the only ones who have taken advantage, and preparation takes along with it three key things: perception of risk, focus in terms of determining position, and ability to move in the right time.
“It won’t be fair not to draw example that is before the country with Aliko Dangote’s Refinery. Dangote wouldn’t have ever thought that there would be a disruption in terms of distribution.”
However, the disruption revealed the fault lines in the distribution chain that Trump’s war has revealed.
Opportunity and preparation yield great success.
China Solar Investments
The most fascinating aspect is the huge amount of money the Chinese are investing into solar for capacity development and installation, the numbers keep growing.
China leads the world in solar energy spending, committing about 1.2 trillion yuan, that’s $660 billion US dollars, towards new solar plant investments, and half a trillion yuan, about 72 billion for manufacturing capacity. These massive financial pushes to supply chain have driven down global costs and falling record-breaking domestic installations.
Whatever happened in terms of reserves which they had internally for oil, is not going to impact on their industrial base.
China continues to churn out great prices that still make the country dominant, thrashing biggest economy even though they don’t have a lot of oil.
Saudi Projection on Renewables
Engr. Oladele also spoke on Saudi Arabia that is projected to spend up to 300 billion US dollars by 2030 on renewable energy and clean infrastructure backed by recent landmark funding packages 8.3 billion agreement for massive new solar and wind additions about 32 billion US dollars green energy pipeline. This double what the China has spent.
The positivity about the industry today is that those who worked with the multinationals having got the experience are now running the industry, but the fear is that once the generation passes, where is the next group of people?
This is the great element that is missing in preparation. Also, there has to be boldness to take risk. The need for operators to sharpen their focus cannot be underestimated whereas two things are in mind, building skills and creating confidence.
The outcome of opportunity meeting preparation is enormous.
Disruptions Create Opportunities
Chairman of Aradel Holdings Plc, Osten Olorunsola in his remarks on the theme of the event was of the opinion that two words stand out, one is disruption. The other is opportunities. Simply put, to disrupt means to stop something from going on normally and cause disorder. But one thing that is often associated with disruption is the emergence of new opportunities. Hence “every disruption creates opportunities.”
Some people never see those opportunities, others see, but do nothing with them.
“A few see them and do something with them, but very few actually see them and really geometrically turn them completely around. Opportunities give rise to other opportunities”
According to the Aradel Chairman, in the energy sector, disruptions are usually seen as catalysts for innovation, transformation, growth, and atimes for competitive advantage. But not all opportunities emerge from disruptions. Rather disruptions give rise to a lot of opportunities. But it’s only those with right vision can see them.
Februarys of Fear and Strait of Hormuz
The month of February gives fear to operators because the Ukraine war was started in it. Stakeholders might be preparing for another uncertain February and look for the opportunities that might arise from its disruption.
The war in Iran certainly has become a major source of geopolitical disruption, with known consequences especially within the Middle East.
It came with greater unintended consequences that have been expanded globally and its effects has reached pandemic scales and mostly felt across energy markets, global trade, financial system and international diplomacy.
Olorunsola stated further that the once little-known Strait of Hormuz has suddenly become the center of all discourse because of the size of global energy and economy that passes through it.
Nobody knows the next Hormuz as the Houthis have also attacked Bab el-Mandeb Strait, located between the southern tips of the Arabian Peninsula close to Yemen. It is connected to the Red Sea used by Saudi Arabia.
As there is disruption, it has created huge challenges and opens strategic opportunities, which are being tapped in various forms for windfall revenues and energy resilience, including strategic preserves.
Countries like China are already shifting to renewables to the extent that hydrocarbon demand is improving. Mixed infrastructure investments are going around the world with refining and petrochemicals.
There is acceleration of renewable energy, expansion of natural gas infrastructure and markets.
Olorunsola believed that Nigeria can turn current global supply chain disruption into a strategic advantage by several means including accelerating its production, whether it is oil, gas or mineral resources, accelerate them to industrial skills, expanding refining and petrochemical capacity, strengthening local content and manufacturing to attract investment through stable policy.
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