Mr Hamis Ussif, Manager for Gas Business at Ghana National Petroleum Corporation (GNPC), has stated that global lenders’ choice to shift away from financing filthy hydrocarbons poses a problem for oil and gas producing countries like Ghana.
Investors continued to shift away from funding oil and gas development throughout the world, he added, and every now and then there were rumors of a group of bankers or one significant financier signaling a halt to hydrocarbon finance.
“During the latest count, we had roughly 1500 global managers with trillions of dollars declaring they will not support dirty fuel,” he declared at the 7th edition of the Ghana Gas Forum.
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He said that renewable energy investment commitments had risen to US$298 billion, while fossil fuel investment commitments were hovering at US$130 billion.
“Renewable energy is now gaining momentum, but already, funding commitments is now much bigger than fossil fuels. Global spend on hydrocarbons based power generation continues to reduce, whereas commitments and funding to renewables continues to increase.
“Tesla, a company set up only in 2003 has become one the biggest companies and as at October 26, its market capitalisation reached US$$1 trillion dollars, while we have the likes of Ford, Toyota struggling due to the onslaught of Tesla,” he pointed out. He explained that the simple reason was that people were eager to move from vehicles fuelled with hydrocarbons to electric vehicles.
Transitioning into energy companies
Mr Ussif said it was therefore necessary for oil and gas companies around the world to start transitioning into energy companies, something, he said the GNPC was already considering.
“For a typical upstream oil and gas company, if you are going to focus on your core, that will be on exploration and production of hydrocarbons and that is where the problem is. So the paradigm is shifting,” he explained. He said oil and gas companies must therefore adopt the notion of an integrated energy company.
“What we have realised is that, as the transition continues to gain momentum, we are going to have more and more consolidations within the sector. We are not going to see companies stick to their oil business because it is a dying business.”
“We are going to have refocusing of energies on gas because it is a transition fuel and has a bit more time to run than oil. It is cleaner and more efficient and works better on power plants,” he stated.
Pursuing opportunities
The Commercial Gas Manager therefore urged companies to pursue the agenda and the opportunities that were in natural gas. For a national oil company like GNPC, he said one of its key mandates was to ensure energy security, by providing the energy security needs of the country. He said on the other hand, with the decarbonisation agenda, people expect GNPC to shun the hydrocarbon resources that would help it meet the energy needs of the country.
“And because of the de carbonisation agenda, you won’t get the usual sources of funding, which are mostly from the global capital market. “So GNPC is trying to ensure that we maximise the resources that we have as quickly as we can, as we want to ultimately transition into an energy company. The segments of the business keeps shrinking: oil is going to be phased out, gas itself has some respite but over the long term, it would also be squeezed out,” he noted.
He concluded that any oil and gas company that wanted to survive had to look beyond its core business.
