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Rising energy demand presents huge business opportunities for Seplat, other African firms – McKinsey & Company

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Seplat Energy Plc, a leading Nigerian independent energy company listed on both the Nigerian Exchange Limited and the London Stock Exchange, including other energy producers in Africa are projected to grow more following the rising demand for energy in Africa.

Africa’s energy demand is also expected to see increased growth over the decade amidst current realities.

Mckinsey & Company – a global management consulting firm – disclosed this at the Seplat Industry Lecture and Dr. ABC Orjiako sendforth party held in Lagos at the weekend.

“There will be rising demand for fossil fuels in Africa driven by industrialization and population growth. Energy demand growth will be led by Nigeria, and this will create tailwinds for energy suppliers like Seplat Energy,” Oliver Onyekweli, Associate Partner and Co-Lead of West Africa Oil and Gas Practice, McKinsey & Company, said whilst presenting a paper on the theme of the lecture dubbed “The Future of African Oil & Gas: Positioning for the Energy Transition”.

He added that Africa’s growing energy demand also creates opportunities for Seplat to explore renewable energy solutions (e.g. solar, blue hydrogen).

Decarbonizing production and cost leadership, he explained, will be key going forward as capital providers continue to reduce exposure to oil and gas, with customers preferencing lower carbon shipments.

He said that the decarbonization of assets to greatest possible extent 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,” Onyekweli said.

According to McKinsey, indigenous producers will define the future of African oil and gas, as IOCs will continue to face pressure to reduce carbon-intensive operations and lower cost of production, which 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,” he noted.

The expert 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.”

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

Commending all stakeholders of Seplat Energy for the great achievements recorded so far, the current chairman, Seplat Energy, Mr. 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 IPO vision, the listing on stock markets, production growth, reserve addition, corporate governance, landmark acquisitions, funding strategy, setting the stage for corporate transformation, amongst others.

Also commenting, the CEO, Seplat Energy, Mr. 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, according to Brown, was why, the Board under Dr. Orjiako decided to re-brand the company as Seplat Energy, which is a signal of “our intent and how we see our future”.

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