Craig De Savoye, commercial director at Protection Vessels International, on how crew managers can utilise a place-based model to support a just transition.
I’m not a climate change activist – I am a pragmatist and as a pragmatist, and a commercial director, I spend time trying to look over the horizon to determine what awaits our industry.
Rather than get into the weeds of ESG and climate change, I’m going to distil the current situation in an incredibly simple phrase – the global north (who is responsible for the majority of emissions over the history of the world) is aiming to reduce emissions, whilst the global south (who, for many countries, are still relatively low emitters yet economically developing) cannot afford to reduce emissions as it will deter growth, and undermine the effort for stable economies and social order.
As a result, we have seen many declarations from large companies in the global north that they will reduce their emissions and in the case of oil and gas, the effects are going to be felt very strongly in the global south.
With that said, over the next few decades oil (and particularly gas) will continue to be extracted from the sovereign lands and waters of these developing countries. Who extracts them will be the big question!
My geographic area of expertise is sub-Saharan Africa. I’ve spent the past 15 years working in the maritime industry there and understand both the current laws as well as the direction of travel for future legislations. But first, a bit of context about the offshore oil and gas industry in sub-Saharan Africa.
Since 2018, the compound annual growth rate in deepwater exploration across sub-Saharan Africa has been a staggering 18%. Over 70 oil and gas projects are expected to commence operations in the region by 2025, which are predicted to add 2.3 million barrels per day of oil (and condensate) and 9.6 billion cubic feet per day of natural gas. This additional capacity is timely as the European Commission has pledged to make Europe independent of Russian fossil fuels before 2030.
This industry is pivotal for the economic growth of Africa, where the per capita GDP is $1,626 (in comparison, global GDP per capita is just shy of $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 revenues. However, the development and operation of offshore fields in sub-Saharan Africa is generally more expensive than the global average and also more carbon intensive. This is where crew managers can play their part in reducing emissions (and claiming Scope 4 avoided emissions) while championing the just transition and the development of place-based economies.
I did some quick calculations and for every 100 seafarers brought in to work in East Africa from Southeast Asia – the equivalent emissions are 305,000 litres of bunkers being consumed. So, as the starting point of my hypothesis, championing a just transition and place-based economy will not only save the charterers the cost of 305,000 litres of fuel, but the owners will save on travel, logistics and claim 305,000 litres of avoided emissions.
What is the just transition?
The just transition is the need 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 this population in a fair and inclusive manner. The Just Transition requires training (or re-training), well-organised labour and an engaged private sector.
In the context of the offshore oil and gas industry in sub-Saharan Africa – it is about ensuring that citizens of the nation holding the hydrocarbons are given the opportunity to participate in a way where, once the hydrocarbons are no longer needed, their skill sets are transferrable to other markets across the world. In addition, the engaged private sector (being the companies undertaking the development of the offshore sector) are working to train, re-train and organise the labour in a way that benefits the citizen of that country.
What is a place-based economy?
Place-based economic development is based on the premise that a local economy must be developed as an appropriate response to the opportunities and limitations of that particular place. The local focus of a place-based economy responds to the larger challenges of energy and global warming crises and promotes socially responsible businesses. In the case of the offshore oil and gas sector – the socially responsible business is to develop local seafarer capacity and to reduce the emissions (and costs) associated to rotating in crew from halfway across the world.
Each nation in sub-Saharan Africa that has an offshore oil and gas sector has its own distinctive advantage that cannot be replicated – be it the population, education or proximity to joining the vessels. The place-based economy aims to build on local assets (such as human resources) and cultivates local entrepreneurship by focusing on the triple bottom line of economic, environmental and social returns on investment.
Looking into the future – what does this mean for crew managers and those larger shipmanagers who are leading our industry through the transition into lower emissions?
There is a massive opportunity, particularly for those with active shareholders and/or dedicated ESG initiatives, to examine the aforementioned prescribed potentials.
We know that collectively we need to find initiatives to reduce our emissions as an industry. We also know that oil and gas (particularly in sub-Saharan Africa) will not stop flowing overnight. Finally, we know that from an ESG perspective – participating in a Just Transition by developing Place-Based Economies is the best route forward.
The question now – is your company prepared to establish this infrastructure and does it have the requisite knowledge and expertise necessary in order to be a part of the solution in Africa?
