The Nigerian National Petroleum Corporation (NNPC) has complained that commencing and continuing new oil and gas projects have been hampered by the liquidity challenges in the sector.
This was revealed by the Group Managing Director of the oil company, Mallam Mele Kyari, during a media parley in Abuja, where he said that despite the crisis brought about by the COVID-19 pandemic and the effect on its activities, the NNPC was working diligently to ensure that for the first time in decades, its shareholders would be paid dividends by the end of 2020.
He declared that the organisation was now more open to public scrutiny with its decision to publish its audited financial report for the first time in 43 years adding that other transparency initiatives taken by the corporation included its monthly financial reports and joining as a supporting organisation of the Extractive Industries Transparency Initiative (EITI).
He added that although the pandemic had prevented the corporation and its partners from attaining the three million barrels per day crude oil production target, NNPC was determined to cut its losses and become a profit-making concern.
The NNPC boss said the national oil corporation had been able cut its losses by over N800 billion between 2018 and 2019, stressing that based on its projections, it would declare dividends in 2020.
Kyari stated that the crisis in the global oil market had forced companies, including NNPC to further cut down losses, rework project costs, as well as review the production cost per unit of crude oil to remain competitive.
“There is no company in the country which has cut its losses within one financial year by N800 billion. We have improved efficiency by cutting 97 per cent in our losses.
“NNPC has never published its audited financial statement in 43 years. We came and started doing that and released the 2018 financial statement. We were not afraid of doing that and there were a lot of criticisms that we lost money in refinery operations and pipeline business.
“Our vision is that NNPC will become a company of excellence and declare dividends to Nigerians and shareholders. We are optimistic that at the end of 2020, NNPC should be able to declare dividends to Nigerians, in spite of the impact of the COVID-19 pandemic.
“According to industry analysis carried out in quarter one, 2020, E&P companies are at risk of losing about $1 trillion in revenue by the end of 2020.
“With new lockdown orders due to resurgence of COVID-19 in Europe and other industrial nations, the estimated revenue shrinkage may likely grow above Rystad Energy estimates by the close of 2020.
“This financial impact and the resultant poor liquidity position is making funding of both existing and new projects more difficult as companies cut spending and defer projects,” he stated.