The Nigerian National Petroleum Company Limited recorded about N27.76 trillion in cost of sales, selling and distribution expenses, and general and administrative expenses in 2025, according to an analysis of its audited financial statements.
The figure represented about 80.4 per cent of the company’s N34.52 trillion revenue for the year and has prompted attention on the cost structure of the national oil company.
However, the N27.76 trillion figure does not appear as a single line item called “operating expenses” in NNPC’s accounts. It is derived from separate components of the audited financial statements, including N25.14 trillion in cost of sales, N33.1 billion in selling and distribution expenses and N2.59 trillion in general and administrative expenses.
The figures came as NNPC reported a profit after tax of N7.2 trillion for 2025, up from N5.4 trillion in 2024. The company also reported revenue of N34.5 trillion, EBITDA of N18 trillion and operating cash flow of N12.8 trillion.
Cost structure compared with other oil companies
The scale of NNPC’s expenditure becomes more notable when compared with financial figures reported by other national oil companies.
Using an average exchange rate of N1,518 to the dollar for 2025, the N27.76 trillion cost translates to approximately $18.29 billion, while the company’s revenue was about $22.74 billion.
Brazil’s state-controlled Petrobras reported $89.2 billion in sales revenue and approximately $16.3 billion in operating costs in 2025.
On the figures reported, NNPC’s operating costs were about 13 per cent higher than Petrobras’ despite Petrobras generating almost four times as much revenue.
The comparison also shows a difference in revenue generated for each dollar spent on operating costs. NNPC generated approximately $1.24 in revenue for every dollar spent on the identified operating costs, compared with about $5.46 for Petrobras.
Saudi Aramco reported $445.65 billion in revenue and other income related to sales in 2025, alongside $257.17 billion in operating costs. Its operating costs represented approximately 57.7 per cent of revenue.
Norway’s Equinor reported $106.46 billion in revenue and other income and $81.11 billion in total operating expenses, putting its operating expenses at about 76.2 per cent of revenue.
Angola’s Sonangol reported consolidated turnover of $9.15 billion, EBITDA of $2.63 billion and net profit of more than $750 million in 2025.
The comparisons provide context for NNPC’s cost structure, although differences in production volumes, business portfolios, downstream activities and accounting treatment mean that revenue-to-cost ratios alone do not establish which company is more efficient.
Cost of sales accounts for most expenditure
The largest component of NNPC’s identified operating costs was cost of sales, which stood at N25.14 trillion in 2025.
The figure was lower than the N33.3 trillion recorded in 2024 but still represented the overwhelming share of the company’s total costs for the year.
Petroleum products accounted for N1.79 trillion, while depreciation of oil and gas properties stood at N3.71 trillion.
Depreciation is an accounting expense that allocates the cost of an asset over its useful life and does not represent a direct cash payment during the year.
Royalties accounted for N4.66 trillion, while direct well expenses were N4.15 trillion.
NNPC also reported N1.69 trillion in flow-station expenses, N1.86 trillion for gas purchased and N2.79 trillion for crude oil purchased.
Other production-related expenditure included N1.06 trillion for crude handling and port charges, N499 billion for gas flaring and N144.4 billion in allocated technical and production costs.
The company also recorded N514.7 billion as a Niger Delta Development Commission levy, N66.2 billion for freight, insurance and other charges and N74.5 billion for safety, environmental and pollution-control expenses.
Another N174.6 billion was recorded for variation in crude stock.
Other direct and administrative costs
NNPC spent N13.8 billion on pipeline maintenance, N213.9 billion on insurance and security, N254.5 billion on labour, N14.1 billion on technical and consultancy charges and N61.6 billion on medical expenses.
The company also reported N1.28 trillion in other direct costs.
According to NNPC, these costs cover the maintenance and operation of oil and gas production assets, including wells, production facilities, pipelines and processing infrastructure.
They also include production chemicals, integrity management, repairs and other field-support services directly connected to production activities.
Beyond the cost of sales, NNPC recorded N33.1 billion in selling and distribution expenses.
The company said these costs were related to services acquired by NNPC Retail for transporting petroleum products to depots within and outside Nigeria.
General and administrative expenses amounted to N2.59 trillion, compared with N3.5 trillion in 2024.
Employee benefits represented N813.9 billion and covered salaries and wages, staff allowances, welfare expenses and other long-term employee benefits.
Depreciation of other property, plant and equipment amounted to N665.8 billion, while depreciation of right-of-use assets stood at N109.3 billion.
Other administrative expenses included N87.3 billion in professional and consultancy fees, N86.4 billion for software licences and maintenance, N129.1 billion for security, N114.8 billion for transport and travelling and N111 billion for training and recruitment.
NNPC also recorded N89.3 billion in insurance costs, N29.2 billion for local community development, N10.3 billion in donations, N33.5 billion for rent and rates and N9.2 billion in bank charges.
Another N282.7 billion was reported under other expenses, which the company said related to joint-venture material-handling expenses and JV personnel costs.
Profit increased despite lower revenue
The high cost structure came in a year when NNPC’s revenue declined by 24 per cent to N34.5 trillion, largely due to lower crude oil prices and reduced volumes of white products following market deregulation in 2024.
Despite the decline in revenue, profit after tax increased by 33 per cent to N7.2 trillion from N5.4 trillion in 2024.
NNPC attributed the improved performance to stronger operational efficiency, cost discipline and improved recovery of outstanding receivables.
The company said it also reduced general and administrative expenses by about a quarter during the year.
According to NNPC’s financial management, G&A expenses fell from about eight per cent of revenue in 2024 to about seven per cent in 2025 despite the lower revenue base.
The recovery of long-standing receivables also contributed to the improvement in profit because some provisions previously made against those receivables were reversed.
Production reaches five-year high
NNPC’s 2025 results also showed improvements in production.
Crude oil and condensate production averaged 1.77 million barrels per day, the company’s highest level in five years.
Natural gas output averaged 7.2 billion standard cubic feet per day, representing a three-year high.
The company said crude oil and condensate production increased to 565.8 million barrels for the year, while natural gas production reached 2,606.2 billion standard cubic feet.
NNPC said its improved production performance, stronger collections and cost-management measures contributed to the stronger financial result.
NNPC targets further cost reductions
The company has said it intends to continue improving operational efficiency and reducing costs.
Its Chief Financial Officer, Adedapo Segun, said unit operating costs in the upstream business fell year-on-year and that further reductions were expected.
NNPC is also targeting crude oil production of two million barrels per day by 2027 and three million barrels per day by 2030.
The company plans to mobilise $60 billion in upstream, midstream and downstream investments by 2030 while advancing major gas infrastructure projects, including the Ajaokuta-Kaduna-Kano pipeline, the Escravos-Lagos Pipeline System and the Obiafu-Obrikom-Oben gas pipeline.
The financial results therefore present two sides of NNPC’s 2025 performance: a significant increase in profit and production alongside a substantial cost base.
The company’s ability to reduce unit costs, improve collections and translate higher production into stronger earnings will remain important as it pursues its longer-term investment and production targets.
