Why we must remain optimistic despite COVID-19 challenges —Irune

Industry operators have been urged to remain optimistic during the global pandemic as oil price volatility reigns unabated in the global crude market.

Speaking during an interview on CNN’s First Move with Julia Chatterley, the Chief Operating Officer (COO) of Oando Energy Resources (OER), Dr. Alex ‘Ainoje’ Irune, said “what we (operators) must do is stay optimistic. I know for most oil producers currently, there are costs that as independents, we have very little control over, so if I break down that operating cost for you, there is a 20-40 per cent that sits out of our control in terminal fees, transportation fees for crude, we have very little control over that.

“As independents, our human resource, our payroll, operations largely is where we look to make those cuts and of course the capital side. We are seeing an uptick in the price, we are seeing the decision by Organisation of Petroleum Exporting Countries (OPEC) to cut 10 million barrels per day; they have taken that huge step. But more importantly, the government is stepping in to ensure that independents like ourselves are engaged in conversations to ensure that process of survival, which is indeed a process for us, unknown as well, is managed jointly, to see that it takes the least amount of time to see a recovery.”

When asked what does this moment mean and these low oil prices mean for the decisions to make as a business, Dr. Irune said further that as a business, “we took a pragmatic approach to hedge our barrels ahead of this, so I will speak to a larger group of independent producers who today at a price of about $25 or $20 per barrel, that is potentially 60-70 per cent of our production and that is sub economic. So that gives you an idea of where we are from a bottom line perspective. We have taken the right steps, we believe, and are encouraged by the government to take those huge decisions.

“The cuts have come in on the capital expenditure side and of course on the operating expenditure side. We are looking aggressively on bringing those budgets down. We all had commitments at the start of the year but the world has changed.”

On the impact of low oil prices and organisational response to COVID-19, Dr. Irune explained that organisations have stepped forward and take on the challenge of the COVID-19 pandemic.

“Look, the industry at large, Russia and Saudi Arabia accelerated potentially what could have been a more manageable situation at this point, but we are where we are. We have made the sacrifices and taken the decisions, but what we have seenis the likes of the Nigerian National Petroleum Corporationb (NNPC) leading us as partners, putting in about $40 million and more into that basket.

We have seen a larger group of banks and other institutions come in, and for us the key is this, the effective spend and distribution of those funds through the palliative measures we have all set out to push to the needy and the most vulnerable, because that is really what this is about.

“Yes, COVID will go and we will deal with those issues, but there will be casualties after we have dealt with the pandemic and a lasting solution our company for one has taken a step to create an aggregator platform to combine donors and last minute solutions so NGOs and boots on the ground. We are encouraging people to come in and donate so we can disperse this money and get it to those that really need it. It has been an amazing showing by the private sector.”

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