We are ready for lower-than $60 oil price, says Austin Avuru, Seplat CEO

Austin Avuru, Seplat chief executive officer says the company’s strategy in combatting near to midium-term challenges such as decline in price of crude oil will be met with adequate preparedness.

“Our work programme for the year and for 2019 is not based on oil prices as high as even $60” Avuru stated while speaking on the outlook for the company after its facts behind the figure event held at the Nigerian Stock Exchange Tuesday. He added that the company runs conservative oil prices in its planning while scenarios for increases in oil prices are also considered while planning.

Seplat, a petroleum company listed on both the Nigerian and London stock exchanges reported a 282 percent growth in revenue from N14.5 billion in 2017 to N55.2 billion in March 2018 . The company also reported a return to profitability of N6.3 billion after tax as against a loss of N5.9 billion in March 2017.

Explaining the reason behind the significant growth, Avuru stated that two main factors contributed simultaneously in helping to boost the company’s revenue, including improved oil prices and the adoption of a production guidance for both natural gas and crude oil.

“As you may remember our biggest crisis was during 2016 and half 2017 when production was shed down to about 10 percent of crude oil levels because of the Trans-Forcados crisis. Since the second half of 2017 we have come out of that problem,” he noted, adding that there have been periodic shut-ins but on the average the company was able to meet with its guidance in terms of production.

Speaking on geopolitical and other global tensions on OPEC lowering oil prices, the Seplat CEO said, “My view has always been that you will have periodic spikes and troughs depending on immediate crisis around the world, but if you take a long term average over a three year period, it all boils down to demand and supply”

He explained that having spent the last year and a half mopping up excess crude oil all over the world, which caused the crash we had in 2015/2016, the situation in the global oil space now is a very tender equilibrium between supply and demand.

He noted that the spike in price is as a result of rise in tension from regions that have the potential of reducing supply.

On the supply of gas and significance of the company’s gas business in growing bottom lines, Avuru said, “We have the OBEN capable of processing 465 million scoffs of gas and on a consistent basis, we deliver between 300 and 400 million scoffs of gas out of that plant into the domestic market.”

He also said that there are discussions on furthering development of gas supply to the domestic market, to service seven critical projects that fall into this national aspiration.

“One of the project is the AsaNorth Ohajii Southfield, which we are developing in partnership with NNPC in the midstream and Shell in the upstream to build the plant in addition to what we have in OBEN”, he said.

The company, according to Avuru, maintains a balance between crude oil and natural gas in terms of bottom line revenue with 70 percent from crude oil and 30 percent natural gas.

“Even though there is so much news about our natural gas potential and delivery we are actually largely an oil company with crude oil contributing 70 percent of our bottom line. But our contribution to domestic market in terms of natural gas is very significant.”