The Nigerian National Petroleum Company Limited (NNPC Ltd) incurred a combined N27.76 trillion in cost of sales, selling and distribution expenses, and general and administrative expenses in 2025, raising questions about the efficiency of its cost structure.
The figure represents about 80.4 per cent of the N34.52 trillion revenue recorded by the national oil company during the year.
The scale of NNPC’s expenditure becomes more significant when compared with the financial performance of other major national oil companies, although differences in production levels, business structures, accounting methods and downstream operations mean that such comparisons do not, on their own, determine operational efficiency.
Based on an average exchange rate of N1,518 to the dollar in 2025, NNPC’s operating costs amounted to approximately $18.29 billion, compared with revenue of about $22.74 billion.
By comparison, Brazil’s state-controlled Petrobras recorded $89.2 billion in sales revenue and approximately $16.3 billion in operating costs in 2025.
Although Petrobras spent less on operating costs in dollar terms, its revenue was almost four times that of NNPC.
The figures also show a significant difference in revenue generated for every dollar spent on operating costs. NNPC generated approximately $1.24 in revenue for every $1 spent on operating costs, compared with about $5.46 generated by Petrobras.
Saudi Arabia’s national oil company, 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, with total operating expenses of $81.11 billion in 2025. Its operating expenses represented about 76.2 per cent of revenue.
Angola’s Sonangol, another African national oil company, recorded consolidated turnover of $9.15 billion, EBITDA of $2.63 billion and net profit of more than $750 million in the same year, according to its audited accounts certified by EY.
However, the comparisons should be viewed as context rather than definitive measures of efficiency, since national oil companies operate different portfolios and have varying cost structures.
BREAKDOWN OF NNPC’S N27.76 TRILLION COSTS
The N27.76 trillion figure was derived from separate sections of NNPC’s audited financial statements rather than from a single accounting line classified as “operating expenses.”
The largest component was the company’s cost of sales, which stood at N25.14 trillion in 2025.
Although this represented a decline from the N33.3 trillion recorded in 2024, cost of sales still accounted for the vast majority of NNPC’s overall operating costs.
Within the cost of sales, petroleum products accounted for N1.79 trillion, while depreciation of oil and gas properties amounted to N3.71 trillion. The depreciation charge is an accounting expense and does not represent a direct cash payment during the year.
Royalties accounted for N4.66 trillion, while direct well expenses stood at N4.15 trillion.
NNPC also spent N1.69 trillion on flow-station expenses, N1.86 trillion on purchased gas and N2.79 trillion on crude oil purchases.
Other production-related expenses 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, alongside N66.2 billion in freight, insurance and other charges.
Safety, environmental and pollution-control expenses amounted to N74.5 billion, while NNPC reported another N174.6 billion relating to variations in crude stock.
Additional expenses included N13.8 billion for pipeline maintenance, N213.9 billion for insurance and security, N254.5 billion for labour, N14.1 billion for technical and consultancy services and N61.6 billion for medical expenses.
Another N1.28 trillion was recorded as other direct costs.
According to NNPC, these costs covered the maintenance and operation of oil and gas production assets, including wells, production facilities, pipelines and processing infrastructure, as well as production chemicals, integrity management, repairs and other field-support activities directly linked to production.
SELLING AND ADMINISTRATIVE EXPENSES
Beyond the cost of sales, NNPC recorded N33.1 billion in selling and distribution expenses.
The company said the expenditure was related to services acquired by NNPC Retail for transporting petroleum products to depots within and outside Nigeria.
General and administrative expenses constituted another significant portion of the company’s expenditure, amounting to N2.59 trillion in 2025 compared with N3.5 trillion in 2024.
Employee benefits accounted for N813.9 billion, covering salaries, wages, staff allowances, welfare 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.
NNPC also recorded 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 transportation and travelling, and N111 billion for training and recruitment.
Other administrative expenses included N89.3 billion for insurance, 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.
The company further reported N282.7 billion under other expenses, which it said related to joint-venture material-handling expenses and personnel costs.
COST STRUCTURE UNDER SCRUTINY
The combined figures show how NNPC’s cost structure compares with those of other major national oil companies.
The N25.14 trillion cost of sales, N33.1 billion in selling and distribution expenses and N2.59 trillion in general and administrative expenses collectively produced the N27.76 trillion operating-cost figure for 2025.
While the figures highlight the substantial costs associated with NNPC’s operations, comparisons with international peers need to take into account differences in their business models, production profiles, asset bases, accounting practices and involvement in downstream activities.
The data nevertheless provides a basis for examining how much revenue NNPC generates relative to the costs associated with running its operations.
