Global Oil Sector still Hunted by Covid-19 Damage – Expert
Oando Energy Resources, Nigeria’s wholly indigenous oil company, has said that the impact of the corona virus pandemic will continue to hunt the global oil sector despite the measures put in place oil companies and governments.
The company chief operating officer of the company, Dr Alex Irune, who spoke during a podcast with African Business, said the phenomenon has also brought about the need to embrace renewables as the future of energy.
According to him, the cost and processes in the development of renewable energy is far less than that of fossil fuels. He stressed that Covid-19 had substantially changed the way business is done in the oil industry, adding that the energy firm had had to cut costs to remain competitive.
“We will see a new shift in investment in renewables which suddenly is good for all of us than the fossil fuel and because we certainly invest for profit and we can see the impact immediately and from an operating standpoint.
“The oil industry has suffered significantly because it is activities-driven because you need people to go out there, run the rigs, drill for oil, run the assets and with Covid-19, which was a challenge of additional time and cost to that activity of getting people out there.
“But the one thing a wind farm can do is to keep turning. The solar panels will keep collecting sun rays and they are low maintenance and low human intervention to run the process. From an operational standpoint it’s easier,” the Oando chief said.
DIVERSIFICATION OPTION IN THE GLOBAL OIL SECTOR
He advised that the Nigeria government should deploy other revenues from oil to diversify the economy, explaining that it was a better option than borrowing from multilateral organizations.
“We can only diversify from what we have. Without the oil and gas sector, we do not have and cannot generate the revenue for diversification because all the other industries have a lag time and a gestation period.
“If we believe as a people we have to borrow to diversify, we might be probably not being truthful to ourselves. These are challenging times like never seen during my time,” he added.
According to him, the company currently produces 50,000 barrels per day, having migrated from downstream to midstream and now upstream, stressing that the survival of any commercial entity in the sector, and also the country, is currently dependent on oil products.
Irune stated many of the companies who built castles the current year ended up cutting back on investments because of the crisis in the international oil market. Their hopes were dashed by the outcome of covid19.
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He disclosed that to ameliorate the impact of the volatility of oil prices, the company’s hedging desk has been very active to cushion its impact and ensure the firm does not suffer shocks.
By Chibisi Ohakah, Abuja