The Nigerian National Petroleum Company Limited (NNPC) reduced additions to its exploration and evaluation assets by 87.7 per cent to N78.8 billion in 2025, down from N640.5 billion in 2024, according to its Annual Financial Report. The company's gas flaring charges fell by 62.2 per cent over the same period, declining to N499 billion from N1.32 trillion, reflecting lower fees and penalties linked to burning natural gas at production sites. The gas flaring charges comprised N247.8 billion in flare fees, down from N708.6 billion, and N251.2 billion in penalties for exceeding approved flaring limits, compared with N610.4 billion in the previous year.
The sharp cut in exploration spending reflects a slowdown in the search for oil and gas in underexplored northern regions, including the Chad Basin, Benue Trough, Bida Basin and Sokoto Basin. Major projects such as Kolmani, which straddles Bauchi and Gombe states, and exploratory drilling in Borno and seismic work in Nasarawa have not yet reached commercial breakthrough levels despite billions of naira invested. A further constraint emerged when President Bola Tinubu's Executive Order 9 of 2026 suspended NNPC's management of the 30 per cent Frontier Exploration Fund, directing the money to be sent directly to the Federation Account for distribution to federal, state and local governments.
NNPC paid N11.56 trillion to settle royalties, rentals and gas flare obligations during 2025, more than four times the N2.83 trillion recorded in 2024. The company also recorded a N1.18 trillion write-back of excess provisions from earlier years, bringing total outstanding liabilities in this category down by 86.2 per cent to N1.27 trillion from N9.21 trillion. Royalty charges increased by 4.1 per cent to N4.66 trillion, while the levy payable to the Niger Delta Development Commission rose by 29.2 per cent to N514.7 billion.
Broader operational spending showed mixed movements. The company recorded no new mineral rights expenditure during the year, compared with N46.3 billion in 2024, and removed mineral rights valued at N16.4 billion after they were fully impaired. Rig site and stimulation expenses fell to N2.9 billion from N16.5 billion, while crude handling and port charges declined to N1.06 trillion from N1.52 trillion. However, direct well expenses increased by 65.9 per cent to N4.15 trillion, depreciation of oil and gas properties rose by 15 per cent to N3.71 trillion, and spending on safety, environmental and pollution control activities climbed to N74.5 billion from N2.3 billion.
Labour costs charged to cost of sales more than quadrupled to N254.5 billion from N59.7 billion, while insurance and security expenses increased to N213.9 billion from N182.2 billion. At the group level, revenue fell by 23.4 per cent to N34.52 trillion in 2025 from N45.08 trillion in 2024. Investments in subsidiaries on the parent company's accounts declined to N6.23 trillion from N6.65 trillion, with the three refineries valued at a combined N2.72 trillion. Anoh Gas, in which NNPC holds a 50 per cent stake, recorded a loss of N4.86 billion during the period.
For savers, borrowers and businesses in Nigeria, the reduced government revenue from oil operations and the reallocation of exploration funds away from NNPC management may affect the availability of public resources for infrastructure and services. The lower exploration spending also signals reduced near-term prospects for discovering new commercial hydrocarbon reserves in frontier basins.