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The First Of 2011 And Related Issues

By Dayo Ojo

A number of oil and gas firsts will be recorded in 2011.  The lucky countries and operators will celebrate such accomplishments.  As they do, they will inadvertently raise questions which will define how enduring the successes will be.

Ghana ranks high on the list of countries with firsts in 2011 as it gets set to quickly follow commencement of oil production from the Jubilee field with loading first commercial cargo. Once that is accomplished, issues such as revenue management and economic empowerment of the stakeholders will become the focus of discourse. And quietly, Ghana will gradually unfold the character of its reputation as an oil producing nation. The world is waiting eagerly to see how Ghana will deal with post—oil economic management. Questions will arise whether oil is a blessing or a curse to Ghana. How will Ghana allocate oil resources? Will it stick to agreed plan? Comparisons will be made whether Ghana will fritter resources like Nigeria or go the way of Brazil which has devoted a significant portion of its energy production to powering an industrial base while at the same time ensuring consistent reinvestment in exploration.

Fifty years on, despite billions of petroleum dollars, Nigeria has continued to crawl like a toddler, unashamed that a 50- year old who does not walk or run is an irredeemable cripple! We expect that the widely publicized deprivation of lives in the Niger Delta, coupled with the attendant violence is more than enough lesson for Ghanaian authorities. The good news is that incurable optimists are convinced that the draft (almighty) Petroleum Industry Bill (PIB) is Nigeria’s answer to policy inconsistency and epileptic implementation of policy in the oil and gas sector.

Few things remaining equal (and unfortunately several things don’t remain equal around here), Uganda is also expected to celebrate first oil and first gas before 2017.  From Cameroon, we expect first gas from the Logbagba gas project while in Egypt we anticipate re-commencement of gas export to Israel.  In Nigeria, a few International Oil Companies (IOCs) and indigenous operators are expected to bring gas projects on stream in support of the goal to improve electricity supply from gas.

Whether it is a new crude stream, a gas plant, new discovery, farm in or mini bid round, it is all good news for the state economies as long as jobs are being sustained, new ones created and there is further investment in the sector. What is worrisome is that while all the accomplishments are being celebrated, little or no attention is paid to the soft but critical issues around the business, that is, the issue of the sustenance of the license to operate by the operators. Whether it is in Ghana, Uganda, Cameroon, Egypt or Nigeria, there is need to pay more focussed attention to what ought to be done if oil and gas companies are to retain their licences to operate. Are new entrants to oil and gas production more vulnerable to operational crises or stakeholder issues than experienced ones? That is a moot point. However, the game is changing. Unlike 50 years ago when Nigeria commenced production, the media is everywhere today. Stakeholders are everywhere and they are more aware. The internet is everywhere. And to add insult to injury, Wikileaks is here! Even without Wikileaks, the accountability phenomenon has taken over. And what does all of this portend? It is that to survive today is far more demanding than it was ten years ago.

While the goes on in Nigeria as to the desirability or otherwise of the Corporate Social Responsibility Bill which is currently in the National Assembly, there is no argument whatsoever about the fact that it is no longer enough for business to pay taxes, fair and equitable wages and walk away.

For businesses to retain their licences to operate there should be a transparent commitment to participating actively in the lives of the communities and contributing more than marginally to improving the quality of life in those communities. A number of companies across the continent are developing gas projects but the curious issue is how many of such companies are devoting time, resources, and personnel to researching or improving on known emergency response procedures? Will the new projects raise new concerns about emergency response readiness? Are there new issues emerging that require equally new strategies and tactics? Is it time to review available regional capability to deal with emergencies? All of these issues must be exhaustively debated if the future licences to operate are to be guaranteed.

Beyond emergency response capacity and capability, there is the critical issue of how the projects, companies and countries tackle the issue of the environment and the socio-economic aspirations of the citizenry. The increase in the number of Nigerian gas projects and the news of the registration of four of those projects under the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM) is welcome. However, registration for CDM and the attendant financial reward is not enough. Equally necessary, is a new phase of engagement and economic empowerment for the stakeholders especially locals who are resident in communities in which the facilities are located.

The bottom line is that oil and gas companies must redraw the stakeholder map and engagement plan in order to regain the trust of society. It is no longer enough to have a good plan. There must be professional handling of the day to day management of issue and crises. If issues do not arise because of what the companies have failed to do, issues will arise because of the increased awareness and knowledge.

Adedayo Ojo is Lead Consultant/CEO of Caritas Communications Limited, a specialist reputation strategy and corporate communication consultancy based in Lagos. Caritas is the West Africa affiliate of Regester Larkin, a pioneer reputation strategy and management consultancy with offices in London, Washington and United Arab Emirates.


Solving the World’s Energy Challenges: The Critical Role of the Private Sector

 By Samuel Bodman

 It’s A PLEASURE TO BE BACK INCAIRO. I would like to thank Omar (Mohanna President of American Chamber of Commerce In Cairo) for that kind introduction. I’m also honoured that my counterparts — Ministers Fahmy and Younes — have joined me at today’s lunch.

Let me get right to the point: the world needs safe, reliable, clean, affordable, and diverse energy supplies — and in considerably greater numbers than we now have. This is a global challenge, perhaps one of the most significant of our time — and one that you all understand acutely.

The International Energy Agency’s most recent World Energy Outlook, estimates that the world’s primary energy needs will grow by 55% by 2030.

Addressing this challenge in a timely way will require literally billions of dollars annually over many years. The IEA estimates that $22 trillion of investment will be needed between now and 2030 to meet expected demand.

We also know that this investment must occur around the world — in developed and developing nations alike — and at all stages of the energy cycle.

At the same time, we all must recognize the realities of global climate change and look for ways to develop cleaner sources of energy that at the very least do not worsen — and hopefully can improve — the health of our earth’s environment.

So the energy scenario we must confront is this: if we are to encourage economic growth around the world, if we are to raise living standards for all people of all nations, if we are to improve our environmental health, the world needs clean, affordable, diverse energy supplies, as well as new suppliers and supply routes. And achieving that demands responsible action both from consuming nations and producing nations.

I don’t want to sound too alarmist, but in some ways, what we are really talking about is reducing the world’s energy insecurity.

So what do we do about it? That answer is complex, of course, and the solution is multifaceted. But, it can be summarized this way: we must grow the pie of what’s available.

For conventional fuels, the principal challenges facing us are: Will the necessary investments be made to bring sufficient hydrocarbons to market? Is the investment climate in producing countries conducive to inviting such capital flows? Are large consuming nations having the right type of discussions and collaborations with producing nations? If not, why not? And, are we adequately investing in ways to produce fossil energy more cleanly and efficiently?

Beyond hydrocarbons, the world absolutely requires new energy options in the form of alternative fuels and advanced energy technologies: the development of commercially competitive cellulosic ethanol; advanced hybrid vehicle technologies — with a focus on developing better batteries; hydrogen fuel cells; solar energy, including an acceleration of the development of solar photovoltaics; high- efficiency wind power; and carbon sequestration and clean-coal technologies.

Besides, any global energy strategy must include efforts to expand access to emissions- free nuclear power in a way that responsibly manages waste and dramatically reduces proliferation risks. The Egyptian government shares this belief. It is a topic that I’ve been discussing with officials during my visit to Cairo, including this morning in my meeting with President Mubarak.

To advance this global effort, nearly two years ago President Bush introduced the Global Nuclear Energy Partnership, which aims to facilitate the worldwide expansion of nuclear energy for peaceful purposes in a safe and secure manner. Among other things, GNEP establishes the common goal of creating reliable fuel services that will provide a viable and economic alternative to the spread of sensitive nuclear technologies.

The partnership seeks to take advantage of the best available fuel cycle approaches to recycle spent nuclear fuel to reduce the amount of waste and tap its unused energy.

In all these areas — from traditional hydrocarbon development to alternative energy to nuclear power — governments certainly have a tremendously important role to play. But the public sector cannot do this job alone. Even our research priorities — the research and development agenda itself— must be developed with substantial input from corporations, utilities, and universities. And, research needs to be conducted in a coordinated way. As we ramp up research and development investment, I believe we also must find innovative approaches to get beneficial technologies out into the marketplace quickly and to share the risk that the capital markets and private sector are not yet ready to take on. In the United States we are doing this through a range of collaborative models, including cost-sharing partnerships and loan guarantees.

At the Energy Department, we are also establishing an Entrepreneur in Residence programme, which aims to bring venture capital- sponsored entrepreneurs into three of our National Laboratories to help commercialize new technologies. And we are developing a new Technology Commercialization and Deployment Fund. This fund will allow our laboratories to move clean energy technologies toward commercial viability though prototype development, demonstration projects, market research, and other deployment activities.

In general, our strategy recognizes that many of the transformative breakthroughs are likely to happen in and in conjunction with — the private sector. . . and that the government must take an active role in encouraging that activity. Personally, I believe that we are already seeing results.

Having spent a good chunk of my career in the financial sector, I can honestly say that for the first time in my life we are seeing the venture capital community put sizeable amounts of money into entrepreneurial companies in the alternative energy business.

In the first three quarters of 2007, investments in the so-called “clean tech” sector (which includes alternative energy and conservation technologies, among other things) by U.S. venture capital firms totaled $2.6 billion — the highest annual dollar volume ever (even with just 3 quarters worth of data) — according to a recent industry report. Of those investments, solar energy was the biggest sub-sector funded, with 35 solar-related deals totaling $664.6 million. And, I interpret this as a clear sign that the clean-energy market is viable — indeed, thriving.

All this illustrates the coalescence of forces that we’re seeing in the energy arena in the United States — and indeed, throughout the world. Governments around the world recognize that there is an urgent need to accelerate the development of these technologies and to bring them to market. And, at the same time, the private sector recognizes that there’s a big opportunity here: one that can favourably impact their balance sheets as well as the world’s energy security and environmental health.

The challenges that we face are too large and too important for a “business as usual” approach. We must bet on technology and we must take some risks.

One final point, which I make with particular emphasis: we must promote increased energy efficiency across the global economy. The truth is the biggest source of immediately available “new” energy is the energy that we waste every day. I believe that improvements in energy efficiency can be achieved — in relatively short order — on a global scale in our industrial and power-generating sectors, our government agencies, our homes, our offices, and our transportation sector.

Collectively, these measures will not only take some pressure off of demand, but also improve the health of our shared environment.

Together, with the right leadership and funding commitments from governments around the globe, with the talent of our world’s scientists and engineers, and with (he capital, commitment and innovative power of our commercial sectors — which you all represent — we will solve this problem . .we will achieve a cleaner, affordable, and secure energy future for all people of the world.

The Honourable Samuel W Bodman, United States Secretary of Energy at lunch with the American Chamber of Commerce in Cairo, January 2008..

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