McKinsey projects massive growth for Seplat, others on Africa’s rising energy demand

BY ONOME AMUGE

Seplat Energy Plc, a leading Nigerian independent energy company, as well as other major energy companies in Africa, are projected to record significant growths over the next decade given the rising demand and consumption of energy in Africa.

The continent’s energy demand is also expected to see increased growth over the same period, buoyed by economic and population growth, especially in emerging market economies.

Mckinsey & Company, a global management consulting firm, disclosed this at the Seplat Industry Lecture and ABC Orjiako sendoff event held recently in Lagos.

Oliver Onyekweli, associate partner and co-lead of West Africa Oil and Gas Practice, McKinsey & Company, in his presentation on the theme of the lecture, “The Future of African Oil & Gas: Positioning for the Energy Transition”, said there woukd be a rising demand for fossil fuels in Africa underpinned by industrialisation and population increase.

Onyekweli also posited that energy demand growth in Africa would be led by Nigeria, the continent’s most populous country, creating tailwinds for energy suppliers like Seplat Energy.

He added that Africa’s growing energy demand also creates opportunities for Seplat to explore renewable energy solutions such as solar and blue hydrogen.

According to McKinsey, the future of African oil and gas will soon be driven largely by indigenous producers as Integrated Oil Companies (IOCs) will be likely to carry on with divestments as they continue to face pressure to reduce carbon-intensive operations and lower cost of production.

McKinsey added that companies like Seplat Energy are well positioned to pick up producing assets going forward, provided they can maintain operational excellence, with a focus on ensuring continued access to talent.

“African energy infrastructure is a compelling opportunity. As the energy transition accelerates, gas will become more prominent as a ‘transition fuel’, especially in Nigeria. Significant domestic gas demand is a positive tailwind for Seplat Energy’s ANOH project and gas’ cleaner carbon profile, relative to diesel, should make gas projects easier to finance,” the consulting firm said.

McKinsey explained further that investing in gas export infrastructure, such as floating liquefied natural gas (FLNG), could create an opportunity to access a high value international spot market.

As capital providers continue to reduce exposure to oil and gas, with customers preferencing lower carbon shipments, McKinsey suggested that decarbonising production and cost leadership would be key going forward.

Decarbonization of assets to the greatest possible extent, it added, would be needed to maintain licence to operate and maintain access to capital at attractive rates.

ABC Orjiako, the pioneer and immediate past chairman of Seplat Energy, commended the company’s stakeholders for the huge successes recorded so far in the company since inception, saying they were products of hard work, sleepless nights and resilience.

Basil Omiyi, the current chairman, Seplat Energy, said 2022 marks a major turning point for the company as Orjiako retires from the Board after leading the company to achieving monumental milestones over the last 13 years, including nine years as a listed entity on both the London and Nigerian Stock Exchanges.

Notable amongst the achievements he listed were the initial public offering (IPO) vision, the listing, production growth, reserve addition, corporate governance, landmark acquisitions, funding strategy, and setting the stage for corporate transformation.

Also speaking at the event, Roger Brown, CEO, Seplat Energy, said Orjiako drove the company’s long-term imperative with regard to global transition away from fossil fuels towards cleaner and renewable energies, advocating a Just Transition, which is to be conducted at an appropriate pace.

Brown explained that the development is a major reason the Board under Orjiako decided to re-brand the company as Seplat Energy, which is a signal of its intent and how it sees the future.