The Natural Resource Governance Institute (NRGI) has recommended that the Ghana National Petroleum Corporation (GNPC) undertake a comprehensive risk assessment of its operations and undertakings, aligning them with the global energy transition process.
The NRGI highlighted the necessity for a comprehensive approach to navigate the effects of the energy transition on diverse stakeholders. In line with this, the NRGI emphasized that GNPC, as a national oil company (NOC), should identify potential risks, evaluate and analyze these risks, and institute a robust mitigation strategy.
Additionally, GNPC should formulate an investment strategy that encompasses energy transition-related concerns, encompassing the business’s sustainability and governance aspects, according to Dennis Gyeyir, the Senior Africa Programme Officer at NRGI.
Speaking in Accra during a stakeholder meeting to discuss the outcomes of a survey on how national oil companies (NOCs) are addressing the energy transition, Mr. Gyeyir noted that numerous companies well-prepared for the transition are situated in Latin America, including Ecopetrol in Colombia, Amex in Mexico, and YPF in Argentina.
He further emphasized the importance of having prepared scenario plans that would allow the company to strategically respond to emerging market dynamics.
Findings
The survey encompassed 15 National Oil Companies (NOCs) across sub-Saharan Africa, Latin America, the Middle East, and North Africa. Among its findings, the survey revealed that a limited number of surveyed NOCs acknowledged the risks posed by the energy transition, with even fewer conducting risk assessments and making these evaluations publicly available.
Moreover, the survey identified that some NOCs possess mitigation plans, yet the connection between these plans and risk assessments remains unclear.
Given these observations, Mr. Gyeyir emphasized that by embracing the energy transition and strategically adapting their operations, entities like GNPC can contribute not only to global climate objectives but also to securing their own long-term viability.
He asserted that companies aiming for sustainable long-term success, alongside their investors, must expand their focus beyond traditional oil and gas and towards low carbon emissions and other strategic anchors for ensuring sustainability.
Recognizing the crucial role NOCs play in the global energy landscape due to their control over substantial oil and gas reserves, the NRGI highlighted that new producers, including Ghana, face significant challenges and opportunities as the world moves towards a more sustainable and low-carbon future.
The NRGI’s survey recommendations for NOCs encompass diversifying their portfolios, investing in research and development, enhancing resource management efficiency, and improving transparency and reporting to achieve operational sustainability.
The NRGI’s study aims to underscore planning gaps related to the global energy transition’s risks for specific NOCs in various countries. It serves as a foundation for advocacy initiatives, sharing knowledge about different NOCs’ approaches and strategies, as well as potential challenges.
Furthermore, the study seeks to present ideas on how to manage transition risks more effectively, drawing lessons from other NOCs’ practices. It also highlights areas where further understanding can be achieved through comprehensive case studies.