Rising Energy Demand Offers Huge Prospects For Seplat, Others, Says McKinsey

Global management consulting firm, Mackinsey & Company says the rising demand for energy in Africa could lead to increased growth over the decade amidst current realities for Seplat Energy Plc, leading Nigerian independent energy company, and other energy producers in the continent.

Such increased energy demand, according to Oliver Onyekweli, Associate Partner and Co-Lead of West Africa Oil and Gas Practice, McKinsey & Company, “will be led by Nigeria, and this will create tailwinds for energy suppliers like Seplat Energy,”

In a presentation on the theme “The Future of African Oil & Gas: Positioning for the Energy Transition,” at the Seplat Industry Lecture and send forth organized for Dr. Ambrosie Bryant Orjiako in Lagos at the weekend, Onyekweli further enthused that such rise in demand for fossil fuels on the continent will be “driven by industrialization and population growth.”

This growing energy demand in Afriica, he continued, “also creates opportunities for Seplat to explore renewable energy solutions (e.g. solar, blue hydrogen).”

Decarbonizing production and cost leadership, McMcKinsey explained, will be key for players in the industry, going forward as capital providers continue to reduce exposure to oil and gas, with customers preferring lower carbon shipments. Decarbonization of assets to greatest possible extent, he added, will be needed to maintain “license to operate” and maintain access to capital at attractive rates.

“As global oil demand peaks, maintaining cost leadership ($/bbl) will be increasingly vital,” he stressed.

Indigenous producers are expected to define the future of African oil and gas, he said, as IOCs will continue to face pressure to reduce carbon-intensive operations and lower cost of production, just as he also maintained that divestment is likely to continue.

“Companies like Seplat Energy are well positioned to pick up producing assets going forward, provided they can maintain operational excellence. Ensuring continued access to talent will be key,” it added.

McKinsey further explained that, “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 (can be paired with LPG). Investing in gas export infrastructure (e.g. FLNG) could create an opportunity to access high value international spot market.”

Responding, Dr. Orjiako, the pioneer and immediate past chairman of Seplat Energy, lauded all the company’s stakeholders for the huge successes recorded so far by the company since inception, saying they were products of hard-work, sleepless nights and resilience.

Also commending all stakeholders for the great achievements recorded, the Chairman, Seplat Energy, Basil Omiyi, said year 2022 marks a major turning point for Seplat Energy as Dr. Orjiako retires from the Board after leading the Company to achieving monumental milestones over the last 13 years, including 9 years as a listed entity.

Notable amongst the achievements he listed were, the Initial Public Offering vision, the listing, production growth, reserve addition, corporate governance, landmark acquisitions, funding strategy, setting the stage for corporate transformation, amongst others.

In his remarks, Chief Executive of Seplat Energy, Roger Brown, said Dr. Orjiako drove Seplat Energy’s long-term imperative with regards 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.

That, he said, was why, the board under Dr. Orjiako decided to re-brand the company as Seplat Energy, a signal of “our intent and how we see our future.”