The Nigeria National Petroleum Corporation says the country’s oil revenue target declined by N1.06 trillion due to COVID-19 and low crude oil price.
The NNPC’s Group Managing Director, Malam Mele Kyari, made the disclosure on Tuesday during a Nigerian Stock Exchange oil and gas webinar with theme as: “Perspectives of Operations and Industry Experts Post- COVID-19”.
According to Kyari, the country’s N2.64 trillion oil revenue target declined by 40 per cent as a result of twin shocks of COVID-19 and low crude oil price.
He said that the pandemic created an unprecedented and global crisis that would cause regions, countries, sectors, companies and individuals to experience reaction, resilience, recovery and adjustment for a new reality.
Kyari, represented by Rose Eshietti, noted that upstream projects were delayed as a result of the pandemic restrictions.
“The energy industry is likely to continue to struggle in the wake of a precipitous drop in oil and gas prices due to dampened demand from the effects of COVID-19,’’ he said.
According to him, revenue and production declines will continue to present major challenges for oil and gas companies, especially those at risk of being unable to refinance debt.
Speaking on emerging opportunities in the industry, Kyari said that the passage of the Petroleum Industry Bill would remove uncertainties and create investment opportunities in the oil and gas sector.
He disclosed that 40 billion barrels and three million barrels per day production target were potential investment opportunities for in-country storage capacity for crude oil.
Kyari urged industry players to exploit the country’s abundant gas reserves for in-country consumption.
He added that private firms should support major partners in the establishment of Integrated Power Plants along the Abuja Kaduna Kano (AKK) Gas Pipeline project.
He said that oil and gas industry players should manage cost, improve efficiency and deliver required cash flow for reinvestment and expansion by taking advantage of opportunities that would keep the industry viable and ready for post COVID-19.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, in his keynote address, also said that the pandemic resulted to loss of revenue and deferred investments.
Sylva stressed the need for innovation and adaptability in the industry for enhanced growth and development.
He said that industry players must adapt in these unusual times, noting that over reliance of crude oil was increasingly diminishing.
The minister, however, assured that Nigeria’s oil and gas industry would emerge stronger from the current challenges
Sylva said that players need to come up with strategies and solutions to issues for quick recovery and economic sustenance.
On the way forward, he called for cost reduction to ensure adequate return on investment and accelerated passage of PIB.
Sylva suggested the full deregulation of the petroleum downstream sector to guarantee industry stability and sustenance.
Earlier, Oscar Onyema, Chief Executive Officer, NSE, said that government and corporate organisations were saddled with the responsibility of overcoming the impact of the pandemic.
Onyema said that the oil and gas sector was critical to the nation’s economy due to its importance to government revenue.
According to him, the sector needs to adopt innovations in growth areas due to crude oil price collapse.
Onyema said that the exchange would continue to provide platform to quoted companies and stakeholders for long-term finance.
He disclosed that about N400 billion issues had been raised by oil and gas companies from the market.
The chief executive officer said that NSE would work with stakeholders to provide a framework for renewable energy.