Craig de Savoie, Commercial Director of Protection Vessels International, discusses how crew managers can support a reasonable transition to a location-based model.
I’m not a climate change activist – I’m a pragmatist and a pragmatist, and as a business director I spend time looking over the horizon to determine what lies ahead for our industry.
Instead of getting into the weeds of ESG and climate change, I’m going to distill the current situation into an incredibly simple phrase – the Global North (responsible for most emissions in world history) is intent on reducing. Emissions cannot be reduced in the global South (for many countries that are still low emitters and are still developing economically) because this would stifle growth and undermine the pursuit of sustainable economic and social order.
As a result, we have seen many announcements by large companies in the Global North to reduce their emissions, and in the case of oil and gas, the effects will be felt most strongly in the Global South.
Over the next few decades, oil (and especially gas) will continue to be extracted from the sovereign lands and waters of these developing countries. The big question is who will extract them!
My geographic area of expertise is sub-Saharan Africa. I have been working in the maritime industry for the past 15 years and understand both the current laws and the direction of travel for future laws. But first, a bit of context about the offshore oil and gas industry in sub-Saharan Africa.
As of 2018, the compound annual growth rate for deepwater exploration in sub-Saharan Africa was 18%. More than 70 oil and gas projects are expected to come on stream in the region by 2025, which is projected to add 2.3 million barrels of oil (and condensate) per day and 9.6 billion cubic feet per day of natural gas. This additional capacity is timely, as the European Commission has pledged to transition Europe independent of Russian fossil fuels by 2030.
The industry is important to the economic development of Africa, where GDP per capita is $1,626 (in comparison, global GDP per capita is only $14,000). More than 50% of African oil and gas producing countries rely on oil and gas exports for more than half of their total export earnings. However, the development and operation of offshore fields in sub-Saharan Africa is generally more expensive and more carbon intensive than the global average. This is where group managers can play their part in reducing emissions (and claiming that Scope 4 avoids emissions) while championing a fair transition and the development of place-based economies.
I did some quick calculations and for every 100 mariners working from Southeast Asia to East Africa – the equivalent emissions consume 305,000 liters of bunkers. So, as a starting point for my hypothesis, a reasonable change and championing location-based economics would not only save charterers 305,000 liters of fuel costs, but owners would claim travel, logistics and 305,000 liters of avoided emissions.
What is mere change?
A fair change is to ensure that the world’s poorest citizens, many of whom live in resource-rich countries, are not left behind. It addresses the development, energy and economic needs of these people in a fair and inclusive manner. Just Transition requires training (or retraining), a well-organized workforce and an engaged private sector.
In the context of the offshore oil and gas industry in sub-Saharan Africa – ensuring that citizens of hydrocarbon-holding nations are given the opportunity to participate in building their capabilities once the hydrocarbons are no longer needed. Transferable to other markets around the world. In addition, the private sector involved (companies undertaking the development of the offshore sector) work to train, retrain and organize the workforce to benefit the country’s citizenry.
What is spatial economy?
Place-based economic development is based on the premise that a local economy should be developed as an appropriate response to the opportunities and limitations of a particular place. The local focus of the place-based economy responds to the grand challenges of the energy and global warming crises and promotes socially responsible businesses. For the offshore oil and gas industry – socially responsible business is about improving local fleet efficiency and reducing emissions (and costs) that circulate across the globe.
Each nation in sub-Saharan Africa with an offshore oil and gas sector has its own unique advantage that cannot be duplicated – be it population, education or proximity to shipping. A place-based economy aims to build local assets (such as human resources) and foster local entrepreneurship by focusing on the triple bottom line of economic, environmental and social returns on investment.
Looking to the future – what does this mean for crew managers and large ship managers who are leading our industry by becoming low-emissions?
Particularly for those with active stakeholders and/or dedicated ESG initiatives, there is a great opportunity to explore the possibilities suggested above.
We know that as an industry we must collectively identify initiatives to reduce our emissions. We also know that oil and gas (especially in sub-Saharan Africa) will not stop flowing overnight. Finally, from an ESG perspective – we know that the best way forward is to participate in a Just Transition by building place-based economies.
Now the question is – is your organization ready to install this infrastructure and have the necessary knowledge and expertise to be part of the solution in Africa?