A big deal of global exhibitions have been delayed recently due to COVID-19. Jereh Group cherishes these channels through which we can interact with worldwide customers and peers. Today, Louis Li, Rotating CEO of Jereh Group, takes this interview as an opportunity to have a conversation with us, with regards to the topics of COVID-19 influence, oil price, industry trend as well as Jereh’s future strategy.
The unexpected pandemic and slumping oil prices have brought negative impacts to the oil & gas industry, would you mind telling us how is Jereh tackling these situations?
We are clear that there are 88 countries with confirmed COVID-19 cases at the moment, many of which have already declared state of emergency, leading to border lockdowns, logistics suspending and significant market demand drop.
The oil market has a close correlation with economic situation. Fluctuations in the economy are bound to influence the demand of energy supply. Early this March, we’ve witnessed the Brent oil price went down from 50 USD per barrel to 24.5 USD per barrel in only two weeks, which is extremely rare in the history.
Anyway, Jereh has implemented multiple measures to offset possible negativity of low oil price and pandemic. Back in January, when COVID-19 broke out in China, Jereh decided to speed up overseas sourcing and logistics in case there would be a shortage of supply. At the moment, we have an abundant storage of materials to support our production. Market-wise, there have been plentiful orders in hand since last year and our teams around the world are still keeping close contact with clients through online communication.
More importantly, Jereh’s business is no longer limited to energy industry. We’ve been cultivating in many other business areas such as environmental management, sanitation equipment, smart agriculture machinery, etc. which are weakly correlated to oil prices. You can imagine the pandemic and oil price only has a limited impact on us.
Journalist: Speaking of COVID-19, what has Jereh done in this battle against the pandemic?
Well, internally, we set up a “temporary emergency department” to deal with pandemic-related issues. We request our management to stand by on their cellphones 24/7 to make sure that every single employee has unimpeded access to latest information and prevention tips. Thanks to strict inspection and careful disinfection we took, Jereh was able to resume operation on February 10. Meanwhile, we issued an internal publication, the Virus Prevention Handbook, offering guidance to employees and ensuring their safety and healthiness.
Outside the company, we also actively take social responsibilities by donating 10 million RMB （1.4 million USD） to local Red Cross Charity and establishing special fund for medical institutes, low-income patients and many others who suffer from the pandemic. One of Jereh’s subsidiaries, Jereh C-Create has this specific electrostatic disinfection sprayer, which leverages electrostatic technology and enables disinfectant droplets to warp target surface in 360°, leaving no backside and crevices. We provided this type of equipment to local hospitals for free to help them with COVID-19 fight. Also, our environmental management facilities were delivered to Hubei Province for medical wastewater treatment in February, where were experiencing the most severe outbreak at that time.
How would you predict future oil price?
It is true that current oil price is experiencing a history low, which is not an optimistic sign for oil & gas industry. However, from my point of view, the low-price situation won’t last long.
From the long run, oil is going to be a major energy source for at least another 20 years. Although clean energy will gradually take its place as a type of fuel, oil is still irreplaceable as chemical feedstock, which can be widely used in daily lives. According to BP Energy Outlook, future oil demand is estimated to rise steadily in the following years. Thus, there is an increasing need to invest and develop new oilfields.
In the meanwhile, low oil price is obviously harming main oil production countries including Saudi Arabia, Russia and the U.S. Especially for the U.S., shale companies are mostly small private businesses whose production cost is much higher than current market price, highly possibly leading to reduced production of shale oil. As for Saudi Arabia and Russia, oil income accounts for a big proportion in their economies. Low oil price will severely impact local economy and people’s daily lives in a negative way. We believe the oil price will stabilize at 50-60 USD per barrel when the pandemic is controlled and market demand bounces back. In a nutshell, Jereh holds enough confidence for future energy industry.
With that being said, we can tell the industry still faces short-term volatilities, what Jereh would do next?
We were in similar situation when oil price jumped from 110 USD per barrel to 40 USD per barrel in 2014. From 2014 to 2017, the whole industry was suffering from the so-called “winter time”， when oil price remained low and investment shrank. Many ran under deficit and more went broke or shutdown. Back then, Jereh chose to adjust strategy quickly and managed to stay profitable during that period. What we firmly believe is that chances are well hidden behind the challenges. As an old Chinese saying goes, “When all means are exhausted, changes are necessary. Once changes are made, things will improve.” It is important to foster the ability of innovation particularly during hard times, which will help you to explore new business modes, reduce cost, create values and contribute to a sustainable development.
We are facing the same pressure that the whole industry is facing, but Jereh is more likely to put more emphasis on searching for opportunities. When you look back at Jereh’s history, you’ll find that we actually rose to fame with no industry background at all in the city Yantai, where barely had oil and gas resources, yet we just made it.
What we are going to do next is to focus on the R&D of intelligent, clean and efficient equipment to offer more competitive solutions to customers. At the same time, we’ll stick to the globalization strategy to look for breakthroughs on international market. More importantly, we shall keep developing emerging businesses and seize every opportunity so as to ensure Jereh’s long-lasting success.
