Dr. Babajide Agunbiade is a businessman, investors and one of the world’s leading offshore production experts with over 20 years experience in the Oil industry. As Director for Houston-based National Oilwell Varco, the largest oilfield equipment manufacturing company globally, he has been responsible for several major and groundbreaking projects across Africa and the Gulf of Mexico. Formerly a Principal Engineer at General Electric Gasification Business Group Dr. Agunbiade holds a Ph.D. in Leadership & Business, from HPCU Atlanta, GA, a Bachelor of Science degree in Industrial & Production Engineering from the University of Ibadan, Nigeria, an MBA in Business Management from the American InterContinental University, Houston, Texas, as well as being a Ph.D. Scholar in Environmental Policy at Texas Southern University, amongst others. In this interview with Femi Oguntayo, he talks about the development in oil and gas industry and projects into the new and emerging energy market.
“OIL CONSUMPTION MAY NEVER RETURN TO LEVELS SEEN BEFORE THE CORONAVIRUS CRISIS TOOK HOLD.” THAT WAS A STATEMENT MADE BY THE OIL MAJOR BP EARLIER THIS WEEK. ACCORDING TO THEM, OIL DEMAND HAS REACHED ITS PEAK. DO YOU THINK THAT’S A FAIR STATEMENT?
I think it is a fair statement. The theory that the world will someday come to rely on less oil is not new. However, the way that that outcome may occur has shifted from peak supply to peak demand. What we are seeing now is that demand is dropping as alternate forms of energy that do not require fossil fuels such as electric cars, wind and a whole lot of other renewable energy options and integrated gasification in a combined cycle from coal have come into play. The demand has peaked and it is fair to say renewable energy will become the largest source of global power generation while oil demand will continue to decline, but predicting how this energy transition will evolve is a vast, complex challenge. So it is a fair statement.
HOW DOES THIS AFFECT SUB-SAHARAN AFRICA? I’M SURE YOU CERTAINLY HAVE BEEN TO SO MANY DIFFERENT EVENTS PRE-PANDEMIC WHERE THIS IS A TOPIC OF DISCUSSION, YOU KNOW OIL IS A DIRTY BUSINESS AND THE BIG GIANTS ARE LOOKING FOR WAYS TO CLEAN UP SOME OF THE MESS THEY’VE MADE BUT IT DOESN’T APPEAR AS IF THIS DISCUSSION IS TAKING PLACE ON THE CONTINENT OR IS IT?
It is not taking place as much as it should be taking place in sub-Saharan Africa. If you look at Sub Saharan Africa along with China and India, these are the places where Oil demand is rising. In the developed world where you are in the UK, North American, and the rest of them, a lot of new technology is coming into play; as I said before, electric cars, windmill, clean energy, Clean Coal and are dropping Supply. However, in Africa, it is still the only commodity that can satisfy the demands of an increasing population, an expanding middle class, and in some cases, the main source of government earning. We still have a lot of need for Oil. As a result, operators and service companies are doing what they can to optimize the Oil production process and reduce the cost to continue producing Oil. As stated, a lot of these African countries do depend substantially on oil revenue for survival. Oil still plays a large role in these Sub-Saharan countries’ economies, accounting for up to 40% of GDP and 80% – 90% of Government earnings. 90% of our external reserves and 80% of government earning for Nigeria are coming from oil same things in Angola, Gabon, and all the rest of the Oil producing countries in Sub-Saharan Africa. So the initiative has not been taken in sub-Saharan Africa. There is no push for anything different; they are still aggressively trying to source foreign exchange, which for the most part, They can only do that through Oil.
NIGERIA’S CRUDE OIL OUTPUT IS RISING DESPITE THE REDUCTION IN GLOBAL DEMAND. YOU SPOKE ABOUT THE DEPENDENCY. DOES THAT WORRY YOU OR ARE YOU HAPPY THAT AFRICA SEEMS TO BE PLOWING AHEAD, EVEN IF THE WORLD IS SHIFTING ITS FOCUS?
Well, you see the restriction that has been placed by OPEC and all the other issues Nigeria is facing with production, even though the way you put it, Nigeria has the potential to produce 2.1 to 2.2 million barrels of Oil. However, you know with the production cut put in place by OPEC, just to shore up oil prices, shows that we now produce between 1.5 to 1.4 million barrels per day, so we have excess capacity. This historic cut is expected to see crude oil prices rebound by at least $15 per barrel in the short term. But with Nigeria’s long-term ability to produce more oil, once the OPEC embargo is lifted, there is no doubt they would ramp-up production as they need the foreign exchange. I mean people are coming in, investors, IOCs playing their little part to drive down drilling and exploration cost so that these countries can make a little bit more money and then be able to satisfy their economic needs. So, yes, it’s a catch 22 for African countries. They need the foreign exchange and they don’t have a lot of options to earn money in other ways and so do I prefer that we look into other sources of energy because you know we may already have peaked as a result of the pandemic, stricter government policies and changes in consumer behaviour, Absolutely. But I mean, given the current scenario at least between now and the next ten years, that’s the situation that we face and that’s what is going to keep happening where I can say that, yes, I am happy Africa is ploughing ahead.