Nigerian National Petroleum Company Limited (NNPC Ltd) incurred about N27.76 trillion in cost of sales, distribution expenses, and general and administrative expenses in 2025.

The amount, which puts the company ahead of its peers in operating cost, is about 80.4 per cent of the N34.52 trillion revenue reported by the group in the financial year.

The scale of the expenditure becomes more significant when placed against the financial performance of other major national oil companies.

NNPC’s N27.76 trillion operating cost translates to approximately $18.29 billion, using last year’s average exchange rate of N1,518 to the dollar, against revenue of about $22.74 billion.

By comparison, Brazil’s state-controlled Petrobras reported $89.2 billion in sales revenue and about $16.3 billion in operating costs in 2025.

Thus, while NNPC’s operating cost was about 13 per cent higher than Petrobras’, the latter generated almost four times NNPC’s revenue.

The difference is also evident in the amount of revenue generated for every dollar spent on operating expenses. NNPC generated about $1.24 in revenue for every $1 spent on operating costs, compared with approximately $5.46 for Petrobras, based on their respective 2025 reported figures.

The comparison does not, by itself, establish that either company is efficient, as the two businesses have different production profiles, portfolios, accounting systems, and downstream operations. It does, however, provide context for the size of NNPC’s cost structure.

Saudi Aramco provides another benchmark. The Saudi national oil company reported $445.65 billion in revenue and other income related to sales and $257.17 billion in operating costs in 2025. Its operating costs represented about 57.7 per cent of revenue.

The comparison extends beyond Petrobras and Saudi Aramco. Norway’s Equinor reported $106.46 billion in revenue and other income, $81.11 billion in total operating expenses and $5.06 billion in net income in 2025. Its operating expenses were about 76.2 per cent of revenue.

Angola’s Sonangol, another African national oil company, reported $9.15 billion in consolidated turnover, $2.63 billion in EBITDA and net profit of more than $750 million in 2025, according to its audited accounts certified by EY.

These comparisons show that the scale and composition of costs vary substantially across national oil companies, making revenue-to-cost ratios useful context but not, on their own, a measure of operational efficiency.

The NNPC figures are derived from separate sections of its audited financial statements rather than from a single consolidated line described as “operating expenses”.

The largest component was cost of sales, which stood at N25.14 trillion, disclosed under note 8.

Although the corresponding cost for 2024 was N33.3 trillion, the 2025 figure still accounted for the overwhelming share of NNPC’s operating cost.

Within cost of sales, petroleum products accounted for N1.79 trillion, while depreciation of oil and gas properties stood at N3.71 trillion. The depreciation charge is an accounting expense rather than a direct cash payment during the year.

Royalties accounted for N4.66 trillion, while direct well expenses stood at 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 costs 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 accounts also show N514.7 billion Niger Delta Development Commission (NDDC) levy, N66.2 billion freight, insurance and other charges and N74.5 billion for safety, environment and pollution control expenses.

NNPC incurred another N174.6 billion on variation in crude stock.

Other expenditure 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 as well as N61.6 billion for medical expenses.

The company also reported N1.28 trillion in other direct costs.

NNPC explained that the other direct costs cover expenditure associated with maintaining and operating 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 services directly attributable to production activities.

Beyond cost of sales, N33.1 billion was recorded as selling and distribution expenses under Note 9 on page 85.

The company said the expenditure related to services acquired by NNPC Retail for transporting petroleum products to depots in and outside the country.

General and administrative expenses provided the third major pool, at N2.59 trillion, compared with N3.5 trillion in 2024.

Employee benefits accounted for N813.9 billion, covering salaries and wages, staff allowances, welfare expenses 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 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.

The company also spent N89.3 billion on insurance, N29.2 billion on local community development, N10.3 billion on donations, N33.5 billion on rent and rates and N9.2 billion on bank charges.

The company reported another N282.7 billion under other expenses, which it said related to joint-venture material-handling expenses and JV personnel costs.

The 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 N27.76 trillion operating-cost figure.