The Nigerian National Petroleum Company Limited (NNPC Ltd.) recorded claims totalling ₦11.2 trillion from the Federation in 2025 for costs and advances incurred on behalf of the government, including expenses associated with securing Nigeria’s oil and gas assets.
An analysis of NNPC’s 2025 audited financial statements showed that the amount represented receivables from the Federation and was linked largely to energy security costs, advances and expenses incurred under an approved arrangement with the Federal Government.
However, the ₦11.2 trillion figure should not be interpreted as ₦11.2 trillion in fresh expenditure incurred entirely during the 2025 financial year. The accounts indicate that the amount includes outstanding receivables and costs carried through the company’s financial statements.
Energy Security Costs Account for a Major Share
According to the financial statements, NNPC’s energy security cost receivable stood at ₦8.67 trillion at the end of 2025.
Other receivables from the Federation, including advances and security related costs, brought the overall amount to ₦11.2 trillion.
The company’s accounts explained that the receivables relate to advances to the Federation and costs incurred to protect the country’s oil and gas assets under an approved framework between the Federal Government and NNPC.
Consequently, the arrangement allows NNPC to incur certain security related costs and subsequently charge them to the Federation.
Figure Rises From Previous Year
The latest figure represents an increase of about ₦4.07 trillion, or 57 per cent, compared with the ₦7.13 trillion energy security expense recognised in NNPC’s 2024 accounts.
The increase highlights the significant financial obligations associated with protecting Nigeria’s petroleum infrastructure from crude oil theft, pipeline vandalism and other disruptions.
Nevertheless, the accounting treatment requires some clarification.
NNPC stated that it recognised no energy security expense in 2025, compared with ₦7.13 trillion in 2024. The company said it completed a reconciliation exercise with relevant government agencies in September 2025.
Following that reconciliation, outstanding energy security cost receivables were netted against royalties, taxes and dividends due as of December 2024.
Therefore, the ₦11.2 trillion figure reflects amounts recorded as receivables and claims rather than a single new cash expenditure incurred during 2025.
Oil Security Remains a Major Industry Challenge
Meanwhile, the disclosure comes against the background of persistent security challenges in Nigeria’s oil producing areas.
For years, crude oil theft, pipeline vandalism and attacks on petroleum infrastructure have affected production and created additional costs for operators and the government.
These challenges have also reduced the volume of crude available for export and domestic refining.
As a result, protecting oil and gas infrastructure has become an important component of efforts to increase national production.
NNPC’s latest financial results indicate that improved security and greater availability of key crude evacuation infrastructure contributed to stronger production during 2025.
Crude Production Records Improvement
Despite the significant costs associated with oil security, NNPC recorded an improvement in crude oil and condensate production during the year.
The company reported average crude oil and condensate production of approximately 1.77 million barrels per day in 2025, representing its highest level in five years.
Total crude oil and condensate production reached about 565.8 million barrels during the year, while NNPC’s equity share increased to approximately 223.7 million barrels.
Natural gas production also increased, reaching about 7.2 billion standard cubic feet per day.
Therefore, the latest figures show a petroleum industry dealing simultaneously with substantial security costs and improving production levels.
NNPC Reports Stronger Financial Performance
Furthermore, the company reported an improvement in its financial performance during the period.
NNPC recorded a 33 per cent increase in profit after tax, even as it continued to carry substantial receivables associated with the Federation.
The improvement in production provided additional support for the company’s operations, while stronger crude and gas output also helped improve activity across the petroleum value chain.
However, the large receivables from the Federation remain significant because they represent amounts tied to costs and advances that NNPC says were incurred on behalf of the government.
What the ₦11.2tn Figure Means
The disclosure has generated attention because of the size of the amount involved.
However, it is important to distinguish between receivables and fresh annual expenditure.
The financial statements show that NNPC’s ₦11.2 trillion claim comprises energy security cost receivables and other amounts owed by the Federation. The company did not recognise a new ₦11.2 trillion energy security expense in 2025.
Instead, the figure reflects amounts arising from the approved arrangement under which NNPC incurs certain costs on behalf of the Federation and records the corresponding amounts as receivables.
This distinction is particularly important when assessing the company’s financial performance and the government’s obligations.
Security and Production Remain Closely Linked
Ultimately, the latest disclosure demonstrates how closely security and oil production remain connected in Nigeria.
When crude theft and pipeline vandalism disrupt production, operators can lose output while government revenues also come under pressure. Conversely, improved protection of petroleum infrastructure can help operators maintain production and move crude to export terminals and refineries.
Therefore, the financial burden associated with oil security remains an important consideration as Nigeria seeks to sustain its recent production gains.
At the same time, the ₦11.2 trillion receivable highlights the need for continued transparency around the costs incurred on behalf of the Federation and how such obligations are reconciled.
With crude production reaching 1.77 million barrels per day in 2025, the focus will increasingly remain on sustaining output, protecting critical infrastructure and ensuring that the financial arrangements surrounding Nigeria’s petroleum resources remain clearly accounted for.
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