Lagos — Oando Plc has said it could implement workers salary cuts as well as lay off of staff if oil prices do not recover as expected.
The company’s Chief Operating Officer, Ainojie Alexander Irune, disclosed this last week when he joined CNN’s Julia Chatterley to talk about the global oil price crash and the effects on the Nigerian economy.
Prices of Brent crude had crashed as much as 60 percent following low demand stemming from supply glut as a result of the COVID-19 pandemic.
As a result, according to him, the company has decided to cut down on its CAPEX and operating costs.
These, he explained, are some of the immediate changes the Nigerian oil company is making in a bid to cushion the effects of the economic fallout from the oil price crash, adding that earlier, the company ensured to hedge all of its barrels just as a precautionary measure.
Irune said: “I think you would see some casualties along the way. What we 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% that sits out of our control in terminally 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”, he said, when asked if the company could cope with operations amidst the price crash.
“To your point, will this be enough? I think the question is the price of oil. We’re seeing an uptick in the price, we are seeing the decision by OPEC to cut 10 million barrels come in to realise the intention of OPEC; they’ve 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,” he said.
Oando is not the only Nigerian oil and gas firm to have implemented tough decisions amidst current market glut.
State oil firm, the NNPC has also laid off over 100 staff members.
Multinationals have also sacked staff, and cut costs to cushion the effect of the pandemic on their operations.