Fossil fuels will continue to dominate the global energy mix – Victor Okoronkwo
Victor Okoronkwo is the new Group Managing Director of Aiteo Eastern E&P Ltd. With over 30 years working experience in the energy sector, twenty of which were spent working with Shell in Nigeria and United Kingdom, his energy experience spans oil and gas exploration and production, electricity deal structuring, electricity generation and natural gas commercialisation. This extensive, hands-on experience in management is complemented by sundry professional and management trainings in topflight institutions around the world. An alumnus of the University of Lagos, Mr. Okoronkwo graduated with a B.Sc. in Surveying Engineering in 1984 and holds an MBA in strategic management. Victor, as he is popularly called, is widely travelled and respected across professional circles. In this brief chat, he sheds light on his company and ventilates his views on the global energy transition.
Could you let us into who Aiteo is – as a corporate personality?
The Aiteo Group is the successor to Sigmund Cummenecci, an Oil products supply and trading company founded by entrepreneur Benedict Peters in 1999.
The Group has grown to become an integrated, globally focused energy conglomerate with interests in Oil and Gas, Electricity generation, Mining, Agriculture and Real Estate.
Aiteo Eastern Exploration & Production Company Limited, AEEPCO, which I lead today, was birthed in 2014 by Mr. Peters. It participated in the divestment exercise of International Oil Companies, IOCs (Shell, Total and Agip as sellers) in Nigeria. AEEPCO emerged the preferred bidder for OML29 and the Nembe Creek Trunk Line, NCTL following rigorous selection criteria which included assessment of its technical and financial capacity in addition to its clearance after a stringent Know Your Customer, KYC; and a comprehensive integrity and due diligence checks. Aiteo therefore put together the largest syndicated loan arrangement for the acquisition, for which it won the Oil and Gas Deal of the Year award 2016 by The Business Year. AEEPCO is the operator of the NNPC/Aiteo Joint Venture (JV) on OML 29.
What do you see as the current Global Energy Trend?
Fossil fuels of oil, gas and coal dominate the global energy mix today. This trend is projected to continue for the foreseeable future. In fact, the Asia World Energy Outlook in 2016 predicted a growth of 1.25 pa in fossil fuels demands leading to a consumption of about 18.9TOE by 2040. Two key areas that drive this demand are motive fuels and electricity generation.
Do you see this trend changing; and how quickly?
The global energy transition is towards a low carbon intensive scenario. Renewables fit this bill. Despite the dominance of fossil fuels, Renewables will continue to grow, but their growth can only be accelerated by technological and environmental considerations. The enabling technologies fueling this growth are dominated by battery technology and Photovoltaics (PV). These technologies are also becoming economically competitive in comparison with conventional energy sources. Consequently, the transition of global energy provides opportunities as well as challenges for countries whose economies are largely dependent on fossil fuel revenues particularly as major energy consuming economies, which are major markets for petroleum products (China, India, Europe, etc.). They are realigning their energy policies and economic dynamics in favor of low carbon intensive sources.
Does this trend signal an end to growth in Fossil Fuels?
Not necessarily. However, I think what it signals is a change in the centre of growth as in my mind fossil fuels will mainly be driven by the non-OECD countries. Therefore, countries rich in fossil fuels will continue to find opportunities to develop their reserves. However, the challenge remains on how the accruing revenues are utilised, not only for their population, but also to reengineer their respective economics towards a reduced carbon intensive economy.
As at the end of 2017, global renewable generation capacity amounted to 2,179 GW, of which hydro energy, with an installed capacity of 1,152 GW, accounted for the largest share; while wind energy and solar energy accounted for most of the remainder.
Electricity deficiency remains the bane of African economies, where more than 600 million people remain outside of grid connected electricity and other forms of non-traditional energy sources. The World Bank says sub Saharan Africa suffers annual outages from 50 to 4,600 hours. These outages add a heavy value to the cost of electricity. Consequently, African countries will need to electrify more and natural gas remains the dominant fuel of choice for this to happen.
What investment opportunities exist in sub Saharan Africa in the energy sector?
The International Energy Agency (IEA) estimates that Africa holds over 500Tcf of natural gas reserves and the major holding countries include Nigeria, Algeria, Libya and Egypt. Contrast this with over 600 million people living without electricity in the region, and you will then appreciate the tremendous amount of investment opportunities not only in fossil fuels to bridge this energy gap, but in oil and gas derivative industries like petrochemicals, steel, etc. providing key ingredients for industrialisation.
AEEPCO through the operatorship of the NNPC/Aiteo JV is contributing to filling this gap through the investment in and development of oil and gas resources in her OML 29 asset within the Niger Delta region of Nigeria. The NNPC/Aiteo JV has become the leading indigenous producer in the region. Aiteo’s strategy is to assist the less carbon intensive energy consumption and targeted at natural gas penetration to displace the more carbon intensive liquid fuels of diesel, petrol (gasoline) and Low/High pour fuel oils. Within the Electricity sub-sector, Aiteo is promoting and seeking business opportunities across Sub Sahara Africa in gas and power projects.
This abundance of natural gas is helping to unlock new exploration potential within African and further positioning Africa in the transition to less carbon intensive energy. The reserve base is fueling growth across the continent in Liquified Natural Gas (Nigeria, Angola, Equatorial Guinea, Mozambique, etc) electricity and infrastructure development and therefore presents enormous investment opportunities across the continent. Aiteo is geared up to participate and provide leadership in these opportunities.
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