African refiners warn of impending impact of withdrawal of funding from oil projects

Emmanuel Addeh

Oil and gas operators from the African Refiners and Distributors Association (ARDA) have said that unless a far-reaching decision on future funding for major projects in Africa is made at the earliest, the industry could face serious challenges.

The group said the impact of environmental, social and governance (ESG) issues on the financing of oil and gas projects has become disruptive, insisting that unless borrowers like Nigeria and other producers African oil companies do not adapt quickly, obtaining the necessary financing for the sector can remain very difficult. hard.

ARDA Executive Secretary Anibor Kragha speaking on: “Implications of ESG Standards on Global Oil and Gas Project Finance”, during the ARDA HSE Working Group Workshop Series and Quality, held virtually, said attracting finance could become more difficult without consideration for emissions reductions, social development and governance.

According to Kragha, with the oil and gas sector in a state of transition, forcing the closure of traditional sources of capital, particularly the World Bank and other national and international development finance institutions (DFIs), alternatives will have to be found. found.

He noted that the impact of the transition will mean that projects seeking funding will have to consider improved health, safety and environmental standards with due diligence and reporting requirements.

In addition, the expert noted that investors must now demonstrate how their HSE and corporate social responsibility (CSR) practices contribute to the company’s return on investment and performance.

He urged professionals, particularly in the HSE segment, to support the sector in bringing it into compliance with global ESG best practices, particularly in the area of ​​environmental issues.

He said: “Covid-19 and the war in Ukraine have more than ever highlighted the need for the refining of petroleum products in Africa. We cannot increase our capacity without funding. For us to get sustainable funding, we need to prioritize HSE. »

Kragha insisted that operational excellence remains critical to success in the downstream oil industry, driving productivity, risk and cost.

Also speaking at the event, Executive Chairman of Energy & Natural Resource Security, Inc. (ENRS), Derek Campbell, said Nigeria and other countries had more to worry about in infrastructure security. energy.

In his remarks on: “Energy Security: The Protection of Critical Energy Infrastructure and Natural Resources,” Campbell denounced the persistent vandalism of infrastructure in the Niger Delta.

He said that instances of security attacks, including drone attacks on oil facilities in Saudi Arabia, the sniper attack on METCALF power station as well as the ransomware attack on Sonangol in 2019 cost the industry huge losses, noting that there was a lack of “domain knowledge”. in the area.

According to him, energy must now prioritize physical and cyber risk mitigation solutions for critical energy infrastructure and natural resources.

Campbell stressed that Energy Security Risk and Resilience Assessments (ESRRAs) should become a practice that countries must now prioritize to avoid growing dangers to critical energy infrastructure.

Also speaking, Janet Ruettiger, offer manager for Honeywell UOP’s thermal oxidation business, said the new technology will help the refining sector meet emissions specifications more efficiently and cost-effectively. with less environmental impact.

Ruettiger said organizations could rethink how waste management is approached at refineries, pointing out that this allows waste management to be integrated into the design of processing units.

With refining, storage and supply shortfalls, experts say more than $15.7 billion is needed to upgrade existing refineries on the African continent alone to produce cleaner AFRI-6 fuels.

In addition, more than $160 billion worth of projects are currently believed to be at risk of funding in Nigeria’s upstream oil sector, amid a recent revelation from the Organization of the Petroleum Exporting Countries (OPEC) that oil-producing nations could struggling to raise the more than $12.6 trillion needed for oil and gas investment before 2045.