morganABLE Economy Watch
According to the financial report, no new energy security expense was recognised in 2025, unlike the N7.13tn recorded in 2024.
KaNo—
The Nigerian National Petroleum Company Limited has disclosed that it recorded claims totalling N11.2tn from the Federation in 2025, representing costs and advances incurred on behalf of the government, including significant spending tied to securing the country’s oil and gas infrastructure.
Details from the company’s 2025 audited financial statements, obtained on Wednesday, showed that the N11.2tn classified as receivables marked a sharp increase of N4.07tn, or about 57 per cent, compared to the N7.13tn recorded as energy security expenses in 2024.
The figure underscores the heavy financial burden associated with protecting Nigeria’s oil and gas assets from persistent threats such as crude oil theft, pipeline vandalism and production disruptions, even as the national oil firm reported improved operational performance and higher profitability.
However, the company clarified that the N11.2tn should not be interpreted as fresh cash expenditure for 2025.
Instead, it represents accumulated costs and advances incurred on behalf of the Federation, which were reflected as receivables in its accounts.
According to the financial report, no new energy security expense was recognised in 2025, unlike the N7.13tn recorded in 2024.
This followed a reconciliation exercise carried out between the company and relevant government agencies, during which outstanding energy security cost balances were netted off against royalties, taxes and dividends due to the Federation as of December 2024.
The reconciliation process was completed in September 2025.
The report explained that “other receivables from the Federation relate to advance payments to the government and the security costs incurred in protecting oil and gas assets,” noting that such arrangements were executed under an approved framework between the Federal Government and the national oil company.
A breakdown of the figures indicated that energy security cost receivables alone stood at N8.67tn at the end of 2025, while other receivables, including advances and related costs, brought the total to N11.2tn.
The disclosure comes against the backdrop of Nigeria’s ongoing struggle with oil theft and pipeline sabotage, which have historically undermined crude oil output and reduced government revenue.
It also follows the Federal Government’s removal of petrol subsidy in 2023 and the subsequent deregulation of the downstream petroleum sector, measures aimed at improving fiscal stability and attracting investment.
In previous years, the cost of safeguarding oil infrastructure had risen significantly. NNPC reported energy security expenses of N4.8tn in 2023, which increased to N7.13tn in 2024, reflecting a jump of N2.33tn or about 48 per cent within a year.
Despite the continued security challenges, the company reported improvements in crude oil production and operational efficiency in 2025.
Its financial statements showed that crude oil and condensate production averaged 1.77 million barrels per day, the highest level recorded in five years.
Total crude oil and condensate production reached 565.8 million barrels during the year, representing a five per cent increase, while the company’s equity share rose by 11 per cent to 223.7 million barrels.
Similarly, natural gas production rose to 2,606.2 billion standard cubic feet, up by nine per cent, with the company’s equity share increasing by 11 per cent to 1,154.9 billion standard cubic feet.
The figures indicate a steady recovery in output, supported by improved asset reliability and enhanced security measures.
Interestingly, while the overall cost associated with energy security remained substantial in the accounts, direct spending on pipeline maintenance dropped sharply.
Pipeline maintenance costs declined to N13.813bn in 2025 from N149.478bn in 2024, representing a reduction of N135.665bn, or about 90.8 per cent.
Industry observers say the drop in maintenance costs may reflect improved pipeline availability and reduced incidents of large-scale vandalism, particularly on major crude evacuation lines.
Speaking during a media briefing on the company’s financial performance, the Group Chief Executive Officer, Bayo Ojulari, attributed the improvements in pipeline reliability to coordinated efforts involving host communities, security agencies and the government.
He noted that the most severe cases of crude oil theft in the past had occurred on major pipelines, but added that recent interventions had significantly stabilised operations.
According to him, the adoption of community-based surveillance models, combined with support from security agencies, had helped restore full availability on key pipelines.
He said reconciliation between crude oil volumes produced and those delivered at export terminals had improved considerably, indicating better accountability and reduced losses.
Ojulari, however, acknowledged that challenges persist, particularly around smaller pipelines and wellheads located in difficult terrains where monitoring is more complex.
To address this, he disclosed that the company was deploying advanced technologies, including fibre optic systems and intruder detection tools, as well as installing protective “well-head cages” designed to detect unauthorised access and trigger rapid response.
The improved operational performance was reflected in the company’s financial results. NNPC reported a profit after tax of N7.2tn in 2025, representing a 33 per cent increase from the N5.4tn recorded in 2024.
Earnings before interest, taxes, depreciation and amortisation rose by 22 per cent to N18tn, while operating cash flow increased by 16 per cent to N12.8tn.
The company also reported growth in shareholder returns, with earnings per share rising by 32 per cent to N35.9 and total dividend declared reaching N5.8tn. Revenue for the year stood at N34.5tn.
NNPC attributed its improved financial and operational performance to progress recorded on key infrastructure projects across the country.
Among these was the completion of the River Niger crossing segment of the Ajaokuta-Kaduna-Kano gas pipeline, including the 40-inch, 623-kilometre mainline, which is expected to boost gas supply for power generation and industrial use.
The company also announced the commissioning of the ANOH-OB3 Custody Transfer Metering Station and progress towards the start-up of the 300 million standard cubic feet per day ANOH Gas Processing Plant.
In addition, it disclosed the acquisition of 500 compressed natural gas-powered trucks as part of efforts to promote cleaner energy use and support the Federal Government’s gas expansion programme.
Analysts say while the improved production figures and profitability are positive signals for the sector, the scale of receivables linked to energy security costs highlights the continuing fiscal pressure associated with safeguarding Nigeria’s oil assets.
They note that sustaining production gains will depend on further reducing oil theft, strengthening infrastructure protection and ensuring greater transparency in the management of security-related expenditures.
As Nigeria continues to rely heavily on oil and gas revenues to support its economy, the balance between operational efficiency, security spending and financial accountability is expected to remain a critical issue for policymakers and industry stakeholders.
