He disclosed this at the 2021 Milken Institute Global Conference, themed, “Charting a New Course”. At the conference, Orjiako’s panel focused on “Energy and Commodity Markets: Structural Bull or Earthbound?”
Responding to the debate on energy transition and how he sees this happening, Orjiako said: “I think one of the biggest challenges in energy transition is the continuous discordant tunes that are being sung across the world. The recent bull market experienced in the commodities market particularly with oil and gas is due in part to the uncoordinated planning of the pace of energy transition. The real message is that net zero emissions does not equate zero fossil fuels.”
He further told the audience that massive withdrawal of funding for fossil fuel projects has led to a market imbalance where with every slight rise in demand comes a sharp increase in commodity prices “as seen in the recent uptick in the price of coal.”
“Energy transition must be done in a collaborative manner where there must be a balance between net-zero/carbon neutrality and energy poverty in Africa and much of the developing world.
“To put this in context, Nigeria for example with a population of over 200 million people has installed grid capacity of 12,500MW, availability of grid power to the population is only 3,000 – 4,000MW. 25,000MW off-grid power is supplied by diesel generators”, Orjiako noted.
“Over 60 percent of the population has no access to electricity and rely heavily on biomass and kerosene for cooking. The challenge remains: how do we prioritise a transition to renewables overnight without addressing the energy poverty that exists with the available fossil fuel. Nigeria cannot afford to not utilise its over 200 trillion cubic feet of gas reserves in the bid to address the UN SDG7 as it pertains to universal energy access. This gas reserves will leapfrog the transition,” he said.
On whether it is possible for oil price to go towards $100 per barrel given the recent demand surge and the example scenario where coal plants cannot sustain demand in China for instance, he said: “It is a possibility that oil price will go beyond $100/bbl in the near term”.