• NNPC’s N27.76tn operating costs consumed 80.4% of N34.52tn revenue
• Petrobras spent 18.3% of revenue on operating costs, while Aramco spent 57.7%
The Nigerian National Petroleum Company Limited (NNPC Ltd) spent about N27.76 trillion on cost of sales, selling and distribution expenses, and general and administrative costs in 2025, consuming more than four-fifths of the group’s N34.52 trillion revenue.
The scale of the expenditure places NNPC’s cost structure under a sharper spotlight when compared with other major national oil companies, including Brazil’s Petrobras and Saudi Arabia’s Saudi Aramco.
Based on NNPC’s reported revenue and expenses, the company spent approximately 80.4 per cent of every naira of revenue on the three major operating-cost categories during the financial year.
Converted at an average exchange rate of N1,518 to the dollar, NNPC’s operating costs amounted to roughly $18.29 billion, compared with revenue of approximately $22.74 billion.
The figures provide an important snapshot of the company’s financial structure, although they do not, on their own, establish whether NNPC is more or less operationally efficient than its international counterparts.
NNPC’s Costs Far Exceed Petrobras’ Relative to Revenue
The contrast becomes particularly striking when NNPC is compared with Brazil’s state-controlled Petrobras.
Petrobras reported $89.2 billion in sales revenue in 2025 and approximately $16.3 billion in operating costs. NNPC, by comparison, recorded about $22.74 billion in revenue and $18.29 billion in operating costs using the stated exchange-rate conversion.
In absolute dollar terms, NNPC’s operating costs were therefore around 13 per cent higher than Petrobras’, despite Petrobras generating almost four times as much revenue.
Another way to illustrate the difference is through revenue generated for each dollar spent on operating costs.
NNPC generated approximately $1.24 in revenue for every $1 spent on operating costs, based on its reported 2025 figures.
Petrobras, meanwhile, generated roughly $5.46 in revenue for every $1 of operating costs.
That comparison highlights the substantial difference in the cost-to-revenue profiles of the two companies.
However, the figures need to be viewed in context. NNPC and Petrobras have different production levels, business portfolios, accounting treatments and downstream operations. Consequently, the revenue-to-operating-cost ratio should not be treated as a standalone measure of efficiency.
Aramco Also Operated With a Lower Cost-to-Revenue Ratio
Saudi Aramco provides another useful benchmark.
The Saudi national oil company reported $445.65 billion in revenue and other income related to sales in 2025, while operating costs stood at approximately $257.17 billion.
Those costs represented about 57.7 per cent of revenue.
That is considerably below NNPC’s 80.4 per cent operating-cost-to-revenue ratio.
The comparison illustrates how different national oil companies can operate with markedly different cost structures, even when they are all engaged in the oil and gas industry.
Aramco’s much larger revenue base also means that its absolute operating expenses are substantially higher than NNPC’s. The relevant distinction is the proportion of revenue consumed by those expenses.
Equinor and Sonangol Add More Context
The comparison becomes broader when other national oil companies are considered.
Norway’s Equinor reported $106.46 billion in revenue and other income in 2025, alongside $81.11 billion in total operating expenses. That placed its operating expenses at approximately 76.2 per cent of revenue.
Equinor also reported $5.06 billion in net income for the year.
Angola’s Sonangol provides another African point of comparison. According to its audited accounts certified by EY, the company reported $9.15 billion in consolidated turnover, EBITDA of $2.63 billion and net profit of more than $750 million in 2025.
Taken together, the figures show that national oil companies can have substantially different cost structures depending on their operations, assets, accounting policies, production profiles and business mix.
For that reason, revenue-to-cost comparisons are best understood as financial context rather than definitive evidence of operational performance.
Where NNPC’s N27.76tn Operating Costs Went
NNPC’s N27.76 trillion figure is not presented in its accounts as a single line item called “operating expenses.”
Instead, the amount is derived by combining costs disclosed in different sections of the company’s audited financial statements.
The largest component was cost of sales, which stood at N25.14 trillion, according to Note 8 of the accounts.
Although this represented a significant reduction from the N33.3 trillion recorded in 2024, cost of sales still made up the overwhelming majority of NNPC’s operating costs in 2025.
The category contains a wide range of expenses associated with the company’s petroleum production and operations.
Petroleum, Royalties and Production Expenses
Petroleum products accounted for N1.79 trillion, while depreciation of oil and gas properties came to N3.71 trillion.
The depreciation charge is important to distinguish from a cash expense. It is an accounting charge that allocates the cost of an asset over its useful life and does not represent a direct cash payment made by NNPC during the year.
Royalties represented another N4.66 trillion, while direct well expenses amounted to N4.15 trillion.
NNPC also recorded:
- N1.69 trillion in flow-station expenses
- N1.86 trillion for gas purchased
- N2.79 trillion for crude oil purchased
- N1.06 trillion for crude handling and port charges
- N499 billion for gas flaring
- N144.4 billion in allocated technical and production costs
The company also reported a N514.7 billion NDDC levy, alongside N66.2 billion in freight, insurance and other charges.
Safety, environmental and pollution-control expenses amounted to N74.5 billion.
NNPC further recorded N174.6 billion relating to variation in crude stock.
Other Direct Production Costs
The accounts show several additional expenses tied to maintaining and operating NNPC’s oil and gas assets.
These 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 charges, and N61.6 billion for medical expenses.
Another N1.28 trillion was classified as other direct costs.
NNPC explained that this category covers expenses associated with maintaining and operating oil and gas production assets, including wells, production facilities, pipelines and processing infrastructure.
It also includes production chemicals, integrity-management activities, repairs and other field-support services directly attributable to production.
Selling and Distribution Costs Were Relatively Small
Compared with the cost of sales and administrative expenses, NNPC’s selling and distribution costs were much smaller.
The company recorded N33.1 billion under this category in Note 9 of its financial statements.
According to NNPC, the expenditure related to services acquired by NNPC Retail for transporting petroleum products to depots both within and outside the country.
While modest compared with the company’s overall operating cost, the expense forms part of the calculation that brings NNPC’s total operating costs to N27.76 trillion.
Administrative Expenses Fell From 2024
The third major component was general and administrative expenses.
NNPC reported N2.59 trillion in general and administrative expenses in 2025, down from N3.5 trillion in 2024.
Employee benefits represented the largest component of this category at N813.9 billion. The figure includes salaries and wages, staff allowances, welfare costs and other long-term employee benefits.
Depreciation of other property, plant and equipment added N665.8 billion, while depreciation of right-of-use assets amounted to N109.3 billion.
Other administrative costs included N87.3 billion in professional and consultancy fees, N86.4 billion for software licences and maintenance, and N129.1 billion for security.
The company also spent N114.8 billion on transport and travelling and N111 billion on training and recruitment.
Additional 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.
Another N282.7 billion was recorded under other expenses. NNPC said this related to joint-venture material-handling expenses and JV personnel costs.
What the Numbers Reveal About NNPC’s Cost Structure
When the figures are brought together, NNPC’s N25.14 trillion cost of sales, N33.1 billion in selling and distribution expenses, and N2.59 trillion in general and administrative expenses produce the reported N27.76 trillion operating-cost figure.
Against N34.52 trillion in revenue, that means approximately 80.4 per cent of NNPC’s revenue was absorbed by these costs in 2025.
The international comparisons add perspective: Petrobras recorded operating costs equivalent to about 18.3 per cent of its sales revenue, Saudi Aramco about 57.7 per cent, and Equinor about 76.2 per cent based on the respective figures cited.
But the numbers should be read carefully. Differences in accounting treatment, business models, production profiles, asset bases and downstream exposure mean that a simple cost-to-revenue ratio cannot tell the full story.
What the figures do show clearly is the scale of NNPC’s expenditure relative to the revenue it generated in 2025—and why the company’s cost structure is likely to remain an important part of discussions about its financial performance and position among global national oil companies.
Source: Guardian Nigeria
