By Olumide Johnson
Nigerian National Petroleum Company Limited (NNPCL) is sustaining crude supply to Dangote Refinery under the approved naira-for-crude arrangement while improving major pipeline availability. At the same time, its 2025 accounts show N11.2 trillion in receivables from the Federation for costs and advances incurred on its behalf, including oil and gas asset security costs.
DECISION HIGHLIGHT
The two developments reveal the economics behind crude reliability. Better pipeline availability can improve production and terminal deliveries, but maintaining that reliability carries substantial security and infrastructure costs. The N11.2 trillion receivable, however, should not be treated as fresh 2025 expenditure.
DECISION MEMO
Bayo Ojulari, Group Chief Executive Officer, NNPC, said that specified crude cargoes are being supplied to Dangote Refinery in Naira, while additional available volumes are supplied in dollars because most NNPC obligations remain dollar-denominated.
“Most of our commitments are in dollars, so there is no point receiving Naira and then going to buy dollars to meet those obligations.”
He added: “We have a commitment for supplying crude in Naira for a specific number of cargoes, typically. But also, the extra crude that are available, we only supply in dollar.”
The commercial arrangement is therefore designed around both domestic refining requirements and NNPC’s foreign-currency obligations.
The operational constraint is increasingly the reliability of crude evacuation. Ojulari also said that community surveillance, government intervention and security agencies had improved the availability of major pipelines. The reconciliation between crude produced and volumes accounted for at terminals has also risen to about 90 percent, compared with 10 percent to 20 percent previously.
That improvement matters because production has limited value if crude cannot reliably reach terminals or refineries. Yet the security architecture required to sustain it has a substantial fiscal dimension.
NNPC’s accounts show an energy security cost receivable of N8.67 trillion, contributing to total Federation-related receivables of N11.2 trillion. The company stated that no energy security expense was recognised in 2025 because outstanding amounts were reconciled against royalties, taxes and dividends due as at December 2024.
“During the year, no energy security expense was recognised (2024: N7.13 trillion). Following a reconciliation exercise with relevant government agencies, the Energy Security Cost receivables were netted off against royalties, taxes, and dividends due as at December 2024. The reconciliation exercise concluded in September 2025.”
Ojulari said that the major pipelines had stabilised, but smaller pipelines and well-heads remain vulnerable.
“We’re installing high-technology, what we call well-head cages, that detect intruders and can quickly respond… On some of the pipelines now, we’re also leveraging technology. We’re advancing technology using fibre optics technology as much as possible and intruder detection.”
The underlying issue is therefore whether improved security and technology can convert into sustained production, lower losses and a declining recurring cost burden.
DATA BOX
- Federation-related receivables: N11.2tn.
- Energy security cost receivable: N8.67tn.
- 2024 energy security expense: N7.13tn.
- Crude and condensate production: 1.77 million barrels per day.
- Gas production: 7.2 billion standard cubic feet per day.
- Pipeline reconciliation: about 90 percent.
- Pipeline maintenance: N13.813bn, down 90.8 percent.
- 2025 revenue: N34.5tn.
- Profit after tax: N7.2tn.
- Operating cash flow: N12.8tn.
WHO WINS / WHO LOSES
Producers, refiners and export operations benefit from more reliable evacuation and crude availability. The continuing exposure is the cost of protecting infrastructure, particularly smaller pipelines and dispersed well-heads.
POLICY SIGNALS
Nigeria’s petroleum-sector performance increasingly depends on combining commercial arrangements with infrastructure security, surveillance technology and faster response systems.
INVESTOR SIGNAL
The critical measure is whether improved pipeline reliability produces sustained crude volumes, stronger terminal receipts and better cash generation without a corresponding escalation in recurring security costs.
RISK RADAR
Smaller pipeline networks, remote well-heads, difficult terrain and response delays remain operational risks. The N11.2trillion receivable also makes transparent reconciliation between NNPC costs and Federation obligations important for assessing the company’s underlying financial position.
Olumide Johnson is a journalist, reporting on energy, maritime, business, and developments shaping Nigeria’s economy.
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