By Peter Uzoho
The Group Managing Director of Aiteo Eastern Exploration and Production, Mr. Victor Okoronkwo, has stated that finance and risk management would remain the key areas of focus for upstream oil and gas companies.
Okoronkwo said this in an address he presented at the recently held Society of Petroleum Engineers Oloibiri Lectore Series and Energy Forum (SPEOLEF).
The lecture had as its theme: “Operational Excellence and Portfolio Optimisation – Way Forward for The Oil and Gas Industry Post COVID-19”.
The Aiteo boss observed that the oil and gas industry was still grappling with the aftermath of the crash in global oil price and collapse in demand, triggered by the COVID 19 pandemic.
Okoronkwo stated: “This phenomenon has accelerated new paradigms in portfolio optimisation and supply chain balance in the industry.
“With the price volatility, geo-political tussle between Russia and Saudi Arabia experienced during the first wave of global COVID-19 lock down, financial leadership and liquidity risk management will remain major areas of focus for upstream oil and gas companies.
“Digitalisation and Big Data have also become key tools for success in the industry and will gain even more prominence in a post COVID era.”
According to him, the industry was not yet out of the woods, despite promising trends in price as influenced by the Organisation of Petroleum Exporting Countries (OPEC+) production cuts.
He said with the unprecedented discovery, approvals and now application of the COVID 19 vaccines, the pandemic would hopefully be contained and economies would start opening again.
Okoronkwo opined that the lockdown has demonstrated that, with increasing speed and capacity in connectivity, like 5G, digital tools were no longer just enabling communication.
“They are providing and indeed accelerating opportunities for value creation and value capture through enterprise integration, communication across multiple social media, remote monitoring, and task automation, all to enhance operational efficiency, integrity, and process safety.
“So today, digitalisation is no longer an option but a fundamental requirement for companies to go leaner and to remain competitive particularly in this era of energy transition,” he said.
Okoronkwo explained that, “It will also require reforming existing enterprise data architecture, adoption of cloud computing, internet of things, artificial intelligence, drone technology, social media and whole lot of other emerging mobile computing and communication platforms.”
He added that digitalisation will bring benefits like improved efficiency, cost reduction, improved quality management, transparency in decision making and so on.
The Aiteo boss, however, warned that digitalisation also comes with some challenges such as data privacy and security, upscaling of existing regulations, standardisation across platforms and the need for reskilling by the aging workforce.
Competitive positioning in the upstream oil and gas sector, according to him, was hinged on the delicate tripod of cost, production, and price and that leveraging digital technologies in the post COVID would help embed a ‘value-for-money’ mindset, that companies will therefore remain agile and keep innovating and reinventing their strategies.
He maintained that this was even so important as the industry grapples with acceleration in energy transition, reductions in upstream capex, increasing disruptions of cloud-based computing, sustained influence of OPEC+ on the global market, and so on.