Seplat boss affirms importance of fossil fuel in global energy mix

As stakeholders in the oil and gas industry continue to raise concerns over possible threat to usage of fossil fuel across the world, the Chief Executive Officer of Seplat Petroleum Development Company Plc, Mr. Austin Avuru, assures fossil fuel will still be relevant in the global energy mix in the near future.

Speaking with the Nigerian Tribune on the role of fossil fuel in global energy mix in near as demand for alternative clean energy like solar and electricity rises, Avuru stated that fossil fuel will still be relevant up to year 2040.

According  to him, “fossil fuel will account for 53 per cent of the world’s energy demand up until year 2040. What we are seeing is a gradual decline in the total contribution of fossil fuel to the energy mix over time. It is not an overnight elimination of fossil fuel.”

Concerns about the relevance or otherwise of fossil fuel have been an issue for discourse in Nigeria because Nigeria depends mainly on proceeds from crude oil exports and the country seems not seen as planning to divest from its reliance on crude oil proceeds. The country’s Sovereign Wealth Fund (SWF) stands at $1.5 billion while its counterparts are boasting of about $1 trillion in SWF.

On Nigeria’s SWF, which stands at $1.5 billion, Avuru said Nigeria is currently lagging behind Angola, Norway and may likely be taken over by Ghana in the management and build-up of its SWF.

SWF is a state-owned investment fund or entity comprising pools of money derived from a country’s reserves. In Nigeria, the Nigeria Sovereign Investment Authority (NSIA or The Authority) is an agency of the federal government set up to manage funds in excess of budgeted hydrocarbon revenues.

He said it was worrisome that Norway, with a population of about five million people, which started oil production in 1971, 13 years after Nigeria, has built up its SWF to about $1 trillion. He also pointed out that Angola has edged up to $5 billion, leaving Nigeria behind with $1.5 billion.

‘‘If Norway stops producing crude oil and natural gas today, its SWF is enough to feed the country forever. That is the kind of thinking that goes into what you do with your resource wealth,’’ he affirmed.

He warned that Ghana, whose oil production is slightly higher than that of Seplat Petroleum, has already built close to $500 million in SWF over a short period of oil production.

‘‘If Ghana continues along the path it is going, and produces for about 30 years, which is half of the number of years we have carried out oil production, it would probably have a SWF  that will be half of its GDP in size.’’

Avuru equally alluded to what other countries are doing with their oil wealth, saying the new king in Saudi Arabia is turning the oil and gas industry into a catalyst for more sustainable economic growth.