Japan's biggest oil and gas explorer Inpex Corp posted a net loss of 111.7 billion yen ($1.1 billion) in 2020 as the COVID-19 pandemic hammered oil prices, cutting its sales and forcing it to book hefty impairment losses.
The result marks Inpex's first net loss since its foundation in 2008 through the merger of Inpex, Teikoku Oil and Inpex Holdings.
"It was a very tough year," Daisuke Yamada, Inpex's managing executive officer, told a news conference. "A plunge in oil prices hit our earnings hard."
Annual sales fell by 400 billion yen, or 34% from a year earlier, to 771 billion yen, 90% of which was due to lower oil prices, he said.
Pandemic-related travel restrictions cut fuel demand and triggered a plunge in oil prices last year. The average Brent crude price in 2020 fell by 33% from 2019 to $43.21 a barrel, the company said.
That led to an impairment loss of 189.9 billion yen on its oil and gas assets, including a 129 billion yen writedown on the Prelude floating liquefied natural gas (LNG) project operated by Shell off northwestern Australia.
But with oil prices recovering sharply, Inpex predicted a return to a net profit of 100 billion yen this year, assuming an average Brent price of $53 a barrel.
Sales are expected to increase 14.5% to 883 billion yen, it said.
The company forecast its oil sales volume to drop 4.7% year on year but its sales volume of gas to rise 3%, despite scheduled maintenance around May-June at the Ichthys LNG project that it operates in Australia.
($1 = 104.7100 yen)
(Reporting by Yuka Obayashi; Editing by Jan Harvey)