Saudi Arabia’s oil corporation, Saudi Aramco, which is valued at about at $1.85 trillion saw its profits jump close to four times, hitting a net income of $25.5 billion for Q2 2021: “Our second-quarter results reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum”. (For comparison’s sake, Apple reported net income of 57.41 billion U.S. dollars in its 2020 fiscal year, the second highest net income to date.)
Extrapolating, Saudi Aramco will hit at least $80 billion net income this year considering that it reported $21.7 billion in Q1 2021.
In contrast, Nigeria reported N287 billion profit after tax in 2020. Nigeria usually has delays in reporting financials across sectors. But using the 2020 guidance, and even if the NNPC outperforms this year, at best case scenario, we can be looking at $1 billion profit!
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So, from this data, we can see that Nigeria has a long way to go. Looking at reserves, barrels pumped per day, and other metrics, Nigeria should be hitting close to $10 billion, if benchmarked with Saudi Arabia. (Saudi Arabia has a capacity of about 11 mbp while Nigeria is at 2.5 mpd; actual productions vary of course). If that happens, we can simply handle all debt servicing from that profit.
So, there is really more room to grow in Nigeria.
Meanwhile, the Corporation has explained how it made the profit it posted.
Speaking at a press conference Thursday at the NNPC Towers, Abuja, the GMD attributed the turn-around of the Corporation from a loss of ?803bn in 2018 to profit of ?287bn in 2020 to the aggressive implementation of cost-cutting measures, improved efficiency through business automation, emphasis on commercially-focused investments and non-interference in the management of the Corporation from any quarters.
The GMD also added that the Corporation saved a lot of cost through contract renegotiation by up to 30% on the heels of the Covid-19 pandemic, introduction of technology that drastically cut travel cost through reduction in in-person meetings and the general automation of processes that enhanced efficiency across the group’s businesses.
He said Management’s focus on the prioritization of investment and staff welfare also helped in boosting the Corporation’s overall productivity and bottom line. […]
He said NNPC’s emergence from loss into profitability, coming shortly after the signing into law of the Petroleum Industry Bill, was a proud moment for him, adding that this was a season of achievements for the nation’s oil and gas sector.
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“..If that happens, we can simply handle all debt servicing from that profit.”- I wish this was possible.
Nevertheless, interesting piece.
Good evening.