Nigeria’s oil giant pares annual loss after slashing costs

Nigeria’s state oil company said its annual loss shriveled to just a few million dollars last year as costs shrank across its operations.

Nigerian National Petroleum Corp. published audited accounts on Thursday, only the second such release in its 43-year history as the company gradually opens up to public scrutiny. It’s a significant shift, since Nigeria’s oil industry — the largest in Africa — generates about half of all government revenue.

NNPC’s net loss narrowed to 1.7 billion naira ($4.4 million) last year from 803 billion naira in 2018, the Abuja-based company said, citing the impact of contract renegotiations, cost cuts and greater efficiency across its divisions. Revenue slipped to 4.63 trillion naira from 4.74 trillion.

The state producer is working to “prune down running costs and grow revenues,” Chief Financial Officer Umar Ajiya said in an emailed statement.

The outlook for 2020 “looks promising,” he said, without elaborating.

Continued cost cuts suggest NNPC could be profitable this year, yet the company — like oil producers around the world — has faced plummeting demand as the coronavirus crisis forces widespread lockdowns.

In June, NNPC published its annual report for 2018, which contained an audited account of all its subsidiaries for the first time.

Its 2019 report appeared just four months later, and shows that income from its National Petroleum Investment Management Services unit — the most profitable division — jumped 75% to 2.83 trillion naira. Earnings at NNPC’s exploration and production unit more than doubled to 479 billion naira.

Nevertheless, the company’s liabilities of 9.68 trillion naira exceeded its assets by 4.4 trillion naira, raising “material uncertainty” about its operations, the auditors wrote in a note.

NNPC operates joint ventures with oil majors, which together pump almost all of Nigeria’s crude. It’s also responsible for supplying refined fuel to the nation’s 200 million people. Its four decrepit refineries continue to bleed cash, losing 154 billion naira in 2019 amid shutdowns for repairs.

The company hopes to stem those refining losses in its 2020 accounts, it said in the statement.

Credit: Bloomberg

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