The Deputy Managing Director of Nigeria Liquefied Natural Gas (NLNG), Mr Isa Inuwa, said in Abuja that the company’s operations had been negatively affected by the low crude oil price.
Inuwa said this on Thursday last week in Abuja at the External Stakeholders Forum, meant to mark the NLNG Commercial Week 2015.
He said that the situation had caused a 30 per cent decline in the company’s revenue as at April 2015
“We have lost 30 per cent of our revenue as at April 2015, compared to 2014.
“Also, we used to pride ourselves that we supply eight per cent of global LNG supply, but we have dropped to about five per cent today,” he said.
Inuwa also attributed the decline in NLNG’s revenue to low consumption of NLNG products.
“Our prices are indexed to crude, at least a significant portion of our portfolio. The price of gas is indexed to Brent, hence if there is a fall in the prices of Brent, it means we will sell for less.
“Another thing to look at is the demand side; NLNG is a substitute to fuel. You can switch between LNG in most instances and other hydrocarbon.
“Those are the two sources for the drop in revenue, name crude price, because a significant portion of our portfolio is indexed to crude price and the fact that LNG is a substitute.
Inuwa said to cushion the effect of the declining crude oil price, NLNG was looking at its operating model and was considering increasing its gas output.
He said the company was investing in the upstream sector.
Inuwa added that the effort was to ensure continuous gas supply and feed stock to its plants in quantity that would enable it to meet the contractual obligations to its customers.
The deputy managing director added that it would enable it to deliver value to its shareholders.
He said between year 2020 and 2021, the agreements and contracts on its trains one to three, with a capacity of 10 million tonnes, were expected to end.
Mr Patrick Olinma, General Manager, Commercial, NLNG, said in spite of the crude oil price decline, NLNG would be able to support its upstream investments to guarantee gas for the nation’s facility.
“When you have this kind of reduction of revenue in terms of pricing, one of the other ways to mitigate this is to increase your volume, gain market share,” he said.