Saudi Aramco Second Wave Advisor – Plan B Must Have Because Virus Can Spread Very Quickly

In an interview with Delfi, he spoke about the role of the state in the economy during a pandemic and the impact of shorter supply chains on geopolitics.

Mr. Daubar advised the Government, which is preparing a long-term investment plan to stimulate the economy, to invest in renewable energy and transportation infrastructure.

The Chairman of the Ignitis Group Supervisory Board also commented on the group’s listing plans. “Of course, the price is affected by whether the markets are falling or panicking,” he said.

– Where were you when the pandemic started?

– When it all started, I was in China on a business trip, but not in Wuhan. I was already in Bahrain, Saudi Arabia in March and then the borders started to close, but I had planned a short vacation and flew to London. It turned out that I spent the entire quarantine, practically until now, at home.

In London, many still work from home. The return to the offices is very slow, in phases. It’s interesting because people get used to working from home. Many people like it, especially those who need to commute to work. In big cities like London, this is more relevant.

Another interesting phenomenon is that many people thought that working from home was not that productive, but it seems to me that many have experienced even more intense work. Meetings, presentations, contact with different teams, etc. t.

– It is said that this should not be called work from home, but “life at work”.

– Yes, I think there will be more flexibility in employment contracts. Part of the day will work from home, part – at the office. The structure of the offices can also change. We are used to open spaces where employees sit next to each other. Maybe that space should be bigger, or maybe people could work in rotation. Now things keep changing.

– How did the pandemic affect Saudi Aramco’s investment plan?

– We have already reported on investment cuts in our reports. Because the company is publicly traded, we communicate with investors, providing reports that show large cuts in capital investment. Strategic projects are postponed for at least 1 or 2 years or abandoned entirely.

– Have there been any new projects?

– Not so far, all old projects are overestimated, revised.

– Or maybe oil prices had more of an impact than a pandemic?

– Yes, all factors play a role. Saudi Aramco also has a geopolitical significance. For example, the price of oil also leads to government decisions that affect the operations of the company.

– Do you propose something to change Ignitis due to the pandemic?

– The preparation of the company was at a very high level. At each meeting of the Supervisory Board, we ask for a presentation on what is happening and how the employees are working. I would say that the company was truly exemplary.

The term ‘competitive resilience’ is now widely used. Competitiveness is about your strategy, in the business sense. Ignitis has very good competitive endurance.

– Do you think now is a good time to make a group list?

– We still have to wait, that moment has not yet come. Then we will see, and you know that markets are also fluctuating, things can change very quickly. I have worked a lot with the capital markets in the past so I am very familiar with cycles.

Of course, the price is affected by whether the markets are falling or panicking. Anyway, during the pandemic, we saw a correction in the markets, more than 20 or 30 percent. the main indices fell. Interestingly, the recovery was very fast. Unlike the economy.

There are different schools of thought on why this happened. Profitability is seen by many as strong, influenced by liquidity driven by the Federal Reserve. Individual investors have also become very active. So far, you can only talk about whether that market is overvalued or not.

– There was a lot of uncertainty at the beginning of the pandemic, you compared it to a tsunami. Perhaps it is already possible to estimate the magnitude of this wave?

– The process is ongoing, but we can already see that the governments of developed countries have responded very well with stimulus packages. Downtime payments have worked very well in key European countries. Help: put on a certain gas mask.

In late summer and fall, these schemes will be removed. Then you will see how companies will react. Some people will go back to work, some companies will restructure. It will be very interesting to see what the reactions will be after 2 or 3 months.

Of course, the different sectors are different. The tourism sector is recovering, but it will not be like before. Aviation is recovering more slowly: people are starting to fly slowly, but the numbers are not yet what they were.

– In Lithuania, the Ministry of Finance is preparing a long-term investment plan to stimulate the economy, called “DNA of the future”. It is planned to spend 6.3 billion by the end of 2021. euros What would you do with this money if you were prime minister?

– It should focus on growth and added value projects. One of those areas is the development of renewable energy. The European Union Recovery Fund will also focus on green energy development. We have directives to go “green” by 2050, so there really is room to invest in that area. Either solar or wind energy.

We may not have a basis for technological development in Lithuania, but there are small companies that are trying to do so. Perhaps there are supply chains that are now starting in China, and given the geopolitical situation, some companies might relocate.

But it can also be a totally new investment. No need to invest in existing businesses. Biotechnology is another area in which Lithuania has success and success stories.

– When it comes to renewable energy, is it already worth the investment? Maybe we still have to wait for technology to improve?

– Technology has already improved, especially during the last decade. Looking at how much it cost to build a wind turbine or solar panel 10 years ago, its price has dropped dramatically.

They have become cheap even in countries that used to be dominated by gas or oil power. The price of a megawatt has dropped so much that you can now compete. Of course, it depends on the country and capacity, but you can already really compete on costs.

– Are only renewable sources enough? Relying on the wind or the sun alone does not turn off. Maybe you should invest in other power plants as well?

– It is necessary to take into account offshore power plants that do not yet exist in Lithuania. There are many other technologies that would be effective in Lithuania. A very good example is the Vilnius cogeneration power plant, where garbage is burned to generate heat and electricity.

By the way, it is also possible to invest in infrastructure. I’m not just talking about energy, but also digital. Lithuania already has a highly developed telecommunications sector. The transport infrastructure can also be improved, as it greatly improves the functioning of the economy. Be it the improvement of the airports or the road or the railways.

– Do you agree with the predictions that the pandemic will shorten the supply chain? How can Lithuanians take advantage of this?

– There was a very good example of medical equipment. When the pandemic broke out, many of the masks sent to European pharmacies or hospitals were made in China. There was a big drawback and those circuits couldn’t provide that much.

You need to have those necessary tools and medicines yourself. I think the chains are short because if they break, the whole supply is broken. If it is a basic necessity good, many companies value it. There will be diversification of the chain.

Businesses will want the ability to develop in their own country or region. We will see the development of chains in the region. The EU will try to deal with its region. Of course, natural resources also come from other countries, but production can be in your own region. It will be interesting to see how this happens.

– Bringing production closer can also have geopolitical consequences. If one of the largest employers is a supplier in China, the state will care less about that region if it is no longer there.

– Absolutely. Supply chains are becoming hostages to geopolitical games. We see a return to the values ​​where trading used to win. We see that Western companies are already reviewing their plans to develop in China and so on.

It may not be very easy to develop when China shows its values ​​by boycotting Australia’s imports. The UK is in the process of banning Huawei’s technology. This will have a great geopolitical impact.

– Should Lithuania seek cooperation with China?

– Cooperation in investments must always be open, investment must be mutually beneficial, knowledge of the rules must not become a tool. If China uses investment as a tool, geopolitically influenced so that countries do not criticize it, then the question arises whether it is really valuable.

China is using “soft power” with the Belt and Road initiative and the Asian Infrastructure Investment Bank. This bank finances many projects that put pressure on the parties. Sri Lanka, for example, loaned itself to a port, and when the country could no longer pay, China actually took over.

– If China’s geopolitical influence increases, will the United States or Europe decrease?

– Many people evaluate differently, we see that there are structural changes in the space of international rules. That so-called “world order” is changing. We will see if the struggle of the great powers will be “soft” or “hard”.

There are many hot spots. In the South China Sea, for example, because of the artificial islands that China built. There, the Americans sail with warships. There is tension over Taiwan.

Another issue is trade wars, tariffs between the US and China, attempts to bury each other. It also affects politics.

– Do you think there will be a second wave of pandemic?

– The pandemic is not over yet. Let’s see what happens in the USA, Brazil, India, Africa, where the number of cases is growing very strongly. The EU movement has already started, but we can see that the virus has not disappeared. The number of cases is not critical, but there are still many.

Keep in mind that the spread of the virus is affected by winter weather, and in October or November we will spend more time indoors, where the virus spreads faster. The virus can come back and spread very quickly.

However, it is said that we will not shut down the entire economy in the second wave. Local clusters will be managed. I think Plan B has to be, and if so, how will we react, how will we be prepared.