3rd from right: Dr. Mustapha Abdul-Hamid, Chief Executive, National Petroleum Authority of Ghana
…The world is recently focused on the supply of cleaner and sustainable forms of energy due to global warming and climate
…Ghana plans to reach its net zero emissions targets by the year 2070 and Nigeria plans to reach its targets by the year 2060.
…CNG as a transportation fuel should be promoted in the downstream while the use of LPG as a cleaner cooking fuel should be encouraged.
-By Felix Douglas
Speaking at the opening ceremony of Oil Trading Logistics Africa Downstream Week in Lagos, the Chief Executive of National Petroleum Authority (NPA), Dr. Mustapha Abdul-Hamid, commended organisers of the conference for sustaining and growing it over 15 years since the maiden edition was first held in 2007. “For those of us who are players in the downstream petroleum industry, we are proud of what you have achieved. In many instances, the energy conferences that are organized around the continent tend to either be heavy on the upstream sector or are an amalgam of all the issues in the energy sector. So, one like the OTL that focuses attention on the downstream, is one that all of us as players in the downstream sector ought to support and nurture and the National Petroleum Authority of Ghana is proud to be associated with the OTL.”
Dr. Abdul-Hamid added that the choice of this year’s theme “Regulating Downstream Energy Transition in Dynamic Times” appropriately reflects issues confronting the petroleum downstream currently. “Indeed, my organization recently hosted the Ghana International Petroleum Conference in Accra on a similar theme “Energy Transition in the African Petroleum Downstream Context: Prospects, Challenges and the Way Forward”, It is very obvious that if there is any sector of the petroleum industry that must be forward thinking in the journey towards clean energy, it is the petroleum downstream sector. And I am happy that those of us in the petroleum downstream sector are being pro-active in initiating conversations that will enable us fashion a strategy that will that continue to define our relevance in the petroleum industry.”
The Ghana NPA boss made it known the world is recently focused on the supply of cleaner and more sustainable forms of energy due to global warming and climate change implications of a human-activity-induced increase in greenhouse gas emissions. There is a planned shrinkage in global production and supply of fossil fuels and the expansion of renewable energy. Western countries are setting targets to switch to renewable energy by the year 2030. Africa which a low emissions as continent rather seeks to accelerate the exploitation of its oil and gas resources in order to fuel its industrialization and economic growth. This certainly will take longer than 2030 to achieve.
Indeed, many countries on the continent have made clear their intention to not leave any of their hydro carbon resources stranded under the belly of the earth. “At the just ended Energy Week conference in South Africa, the President of Uganda was very clear, that Africa was not going to allow itself to be dictated to, in regard to the move towards the phasing out of fossil fuels. Ghana, for example plans to reach its net zero emissions targets by the year 2070 and Nigeria plans to reach its targets by the year 2060.
According to Dr. Abdul-Hamid, West African countries largely rely on terzod petroleum product imports to sustain their incomes albeit possessing proven reserves of over 620 trillion cubic feet of gas and 125 billion barrels of oil. The bulk of the crude oil produced on the continent is exported. The African continent therefore highly susceptible to volatile petroleum product prices, unreliable suppliers and more severely in recent times, depreciation of local currencies against the US dollar.
Africa as a continent is the most exposed to the current global energy dilemma. To survive, the continent needs to strike a good policy and commercial balance among the three issues of energy equity (affordability and accessibility), energy security and environmental sustainability. African nations need to be able to provide energy equity by ensuring that affordable energy is made accessible to the citizens. They need to provide energy security by ensuring that there is continuous and uninterrupted supply of energy. Environmental sustainability needs to be pursued with a just and equitable energy transition to net zero emissions on the continent.
The Ghana NPA helmsman made it known that demand for transportation fuels such as petrol and diesel will still be significant on the African continent for a while. “Therefore, for us in the petroleum downstream industry, it is important to operate an enabling regulatory environment that maximizes our oil and gas potentials while promoting a just transition.”
To achieve this, it is important to pay attention to four key areas:
Firstly, creation of a good business enabling environment for all petroleum downstream service providers. Investors need to be assured of cost recovery and guaranteed return on investment. “In Ghana, the way we have done this is to deregulate petroleum product prices, and to remove subsidies on all products except Residual Fuel Oil and Premix which we classify as social products that benefit the poor. In addition, we have established a competitive margin and tariff setting regime with the aid of our petroleum products pricing formula.”
Secondly, ensure that there are effective standards and a strong legal framework. Service providers and consumers have confidence when they know that industry standards are benchmarked against world class standards and that the legal framework provides consistency in the application of these regulatory standards. Ghana’s downstream industry is regulated through the NPA Act, 2005, Act 691. “We are currently in the process to repeal and replace the Act because 17 years down the line, the NPA Act has been overshadowed by events of the dynamic times such that most situations are not covered adequately under the Act.”
Thirdly, connecting Africa’s downstream to its upstream petroleum activities. The continent exports its crude oil and imports its finished petroleum products. The gap here is the unavailability of efficient refineries, storage, and distribution infrastructure. Projects such as Dangote’s 650.000 barrels per day refinery is a breakthrough for the West Africa region when it becomes operational. “I also watched with admiration on television, the recent (Saturday 22nd October 2022) commissioning of Pinnacle’s $1 billion dollar offshore subsea petroleum terminal significant (which includes offshore mooring facilities, a network of pipelines and product storage) in Lekki, Lagos.”
In the case of Ghana, government is implementing a land in the western part of the country. The $60billion petroleum hub project on a 20,000acre facilities, storage, and marine facilities. All the above-mentioned projects will help accelerate the petroleum hub consists of refineries, petrochemical development of the continent’s oil and gas resources, by connecting the downstream to the upstream.
Fourthly, Promotion of cleaner fossil fuels and biofuels as the pathway to a just energy transition. Gas has been accepted as the transition fuel because gas is the least carbon emitting fossil fuel. Therefore, Compressed Natural Gas (CNG) as a transportation fuel for example should be promoted in the downstream. The use of Liquefied Petroleum Gas (LPG) as a cleaner cooking fuel should also be encouraged.
“In Ghana, we will soon commence implementation of the Cylinder Recirculation Model to aid the increase of LPG use from 38% to at least 50% of households by the year 2030. We should support the reduction of sulphur in our fuels and harmonization of fuel specifications across the continent as being promoted by the African Refiners and Distributors Association (ARDA). We should also look to promote the domestic production and consumption of biofuels such as ethanol either as a blend into fossil fuels or for direct consumption.”
Dr. Abdul-Hamid revealed that Ghana has a policy that allows transportation fuels to be composed of biofuels up to 10%. Also, as part of the country’s transition plan, ethanol as a cooking fuel will be promoted.
He said government regulations play vital role in ensuring implementation of a just transition where there are no drastic job losses and stranded oil and gas assets on the continent. Regulations and incentives lead to greater innovation, and in turn, allows companies to commercialise more rapidly oil and gas assets.
“We must therefore steer our countries towards low carbon economies and net zero energy sector but prioritize economic growth and development in the process.”
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