The African Petroleum Producers’ Organisation (APPO) has selected Abuja, Nigeria, the continent’s largest oil producer to host the headquarters of the newly established Africa Energy Bank (AEB). This followed a review by a Ministerial Selection Committee which evaluated based on criteria such as socio-economic factors, safety, security and accessibility.
The AEB, which aims to address the funding challenges faced by Africa’s oil and gas industry amid the global energy transition, is jointly established by APPO and multilateral development finance institution – the African Export-Import Bank (Afreximbank).
The supranational institution expected to have an initial share capital of $5 billion, will focus on financing energy projects across the continent, including both fossil fuels and renewable energy sources, is expected to provide funds for African energy projects, including emerging oil and gas projects across the continent.
Already, following the bank’s announcement in November 2023, Afreximbank pledged partnership with over 700 banks on the continent to chart a profitable pathway for the African energy sector.
Nigeria’s selection, according to a statement, followed a meticulous review process, with the decision made during the 45th Extraordinary Session of the APPO Ministerial Council – held virtually on July 4, 2024 and chaired by the Minister of Hydrocarbons of the Republic of the Congo Bruno Jean Richard Itoua.
As part of its commitment to the ideal, Nigeria’s Minister of State for Petroleum Resources (Oil) Heineken Lokpobiri assured the Council that the country will provide the necessary facilities for the bank’s timely and effective establishment.
Nigeria continues to advance its energy sector with notable projects and initiatives, especially its LNG capacity which is expanding with ongoing investments in the Nigeria LNG Train 7 project. Last month, integrated energy solutions provider Tetracore commissioned phase one of its Compressed Natural Gas facility, with expected capacity of 3.1 million standard cubic feet per day (MMscf/d), with plans to expand capacity to 6.2 MMscf/d in the future. This initiative is projected to increase gas availability along the nation’s Western-Southern corridor.
Additionally, the Nigerian National Petroleum Corporation (NNPC) recently signed a Project Development Agreement with marine LNG infrastructure developer Golar LNG to deploy an FLNG facility offshore Niger Delta. The facility will produce LNG, LPG and condensate and is expected to have a capacity of 400-500 MMscf/d, demonstrating Nigeria’s ability to attract investments in the gas sector, which is a vital component for diversifying its energy mix and achieving energy security.
In addition, multinational energy corporation TotalEnergies and the NNPC also reached a $550 million FID for the development of the Ubeta gas field. Included in this development is the construction of a 5 MW solar plant and electrification of the drilling rig to mitigate the development’s carbon footprint. The decision for these companies to invest in Nigeria’s energy sector is a testament to its attractive socio-economic factors, its secure investment environment and its commitment to developing large-scale oil, gas and clean energy projects.
The establishment of the AEB in Nigeria, it is believed, is especially appealing given the recent financial support from international institutions including last month’s approval by the World Bank of a $2.25 billion package. The fund, which serves as financial endorsement, enhancing investor confidence, while signaling strong international support for Nigeria’s economic development, experts say, will help Nigeria improve its oil revenue management, ensuring fiscal sustainability, cultivating economic growth and enhancing public services.
Reacting to the development, NJ Ayuk, Executive Chairman of the AEC described the selection of Nigeria as a great milestone for the bank and a challenge for the country “to live up to its true meaning in getting its own home-based energy industry to work.”
According to him, “massive energy reserves available in the country will only support the bank and help drive it. There is also an amazing amount of talent in- and outside of the country, which will be instrumental in driving a world-class institution that will be operated in the same way that every western and Asian financial institution is operated. We at the chamber welcome this milestone and hope that the robust initiatives that are being taken to drive this bank will only serve to benefit the continent.”