Global Energy Prices Will Worsen If Banks Fail To Fund Gas Projects, Kyari Warns

The Chief Executive Officer/ Group Managing Director of the Nigerian National Petroleum Company Ltd, Mele Kyari, said that current global energy prices will worsen if banks and other financial institutions shy away from investing in gas projects.

Kyari said this on Tuesday at the 28th World Gas Conference 2022 held at Daegu, South Korea.

Kyari said, “In very many jurisdictions, gas is nearly always associated. So, you have to turn the table to see if you can get non-associated gas so that banks and financial institutions can put their money into it.

“If that doesn’t happen, then you sure have the constraints of financing and the opportunity will now turn into a crisis. I think that is what we are trying to solve to see how we can turn this so that the facility that we are building or the facilities we are going to build will have enough gas to process and deliver into the market.

“Honestly, it is a huge opportunity for the financing sector, I know for sure in our own perspective we have seen a number of projects that can come up very quickly. Mostly, the LNG facilities where you can convert gas to chemicals and these are really coming up in their very numbers across many National Oil Companies (NOCs) that I’m aware of.

“The immediate future is getting the right financing, the right mix, and also for the finance institutions to recognise that except they invest today, what we are seeing today in terms of pricing can be something much more to manage in the next two three years to come.”

Kyari said the NNPC Ltd is not averse to the push for carbon neutrality, adding that funding gas projects is a vital decision to be made to avert future crises.

At the Cop26 which was held in 2021, African countries advocated for justice in the transition for a cleaner fuel.

Africa has natural gas reserves of over 620 trillion cubic feet as of 2021, as most countries including Nigeria have chosen gas as a transition fuel.

Nigeria has the largest natural gas deposit in the continent with over 200 trillion cubic feet.

At the recently concluded Africa Finance Corporation in Abuja, the leaders launched a road map for its transition where gas was prioritised.

Investors sentiment in investing in fossil fuel has gone down, but the Russian Ukraine war has triggered a fresh scramble for gas to feed Europe which seeks to cut dependence on Russian gas.

But Kyari said, “The choice that we have to make which is that climate change is real. We have to do something about it, but the biggest and the cleanest that we can do is to focus on the gas industry which means that there must be some mew conversations around financing.

“It is a terrible challenge today, but we know that companies will like to invest but it has to come from the cash flow.

“Lending institutions are terribly challenged today, so all these issues must come on the table today so that we can face the realities of today while not forgetting that we have real issues around differentiating energy poverty across the world which needs very different approach by location and by geography.

“When you combine all of these, it creates a very huge opportunities for gas businesses across the globe while submitting to the realities and addressing the challenges of climate change.”