NNPC slashes costs by $3.4bn amid oil production surge

The Nigerian National Petroleum Company Limited has reduced its operating costs by $3.4bn through an aggressive contract restructuring and optimisation programme, in what the state-owned energy company described as one of its biggest efficiency gains since becoming a commercially driven enterprise.

The Group Chief Executive Officer of NNPC Limited, Bashir Bayo Ojulari, disclosed this on Tuesday while presenting the company’s one-year performance scorecard at the opening ceremony of the 25th NOG Energy Week in Abuja.

The cost-cutting achievement formed the centrepiece of the company’s performance report, which also showed improvements in crude oil production, gas output, government revenue, export terminal efficiency and operational transparency.

According to Ojulari, the cost savings were achieved without slowing operations, demonstrating that improving efficiency rather than increasing expenditure remains central to the company’s strategy for delivering value to the Federation and investors.

He said the contract optimisation programme had enabled the company to eliminate waste, improve commercial discipline and strengthen the competitiveness of Nigeria’s petroleum industry.

Presenting the scorecard, Ojulari said NNPC recorded a six per cent increase in crude oil production to 569.7 million barrels year on year, while gas production rose by 8.1 per cent to 2,576 billion standard cubic feet. He added that the company’s contribution to government revenue increased by 21.8 per cent to N19.5tn over the review period.

The NNPC boss said, “Our transformation is yielding measurable outcomes. We have achieved a six per cent increase in crude oil production, an 8.1 per cent increase in gas production, delivered N19.5tn in government take to the Federation, representing a 21.8 per cent increase, and successfully reduced costs by $3.4bn through contract restructuring and optimisation.

“These are not just numbers. They demonstrate that operational discipline, commercial efficiency, and strategic reforms can simultaneously increase production, reduce costs, and improve returns to the nation.”

Ojulari further revealed that Nigeria’s crude oil production had risen to about 1.71 million barrels per day, the highest level recorded in five years, while the NNPC Exploration and Production Limited attained a record production of 365,000 barrels per day.

He disclosed that the company’s long-term target is to raise crude oil production to two million barrels per day by 2027 and three million barrels per day by 2030. According to the scorecard, NNPC projects total gas production to increase from about 7.62 billion cubic feet per day this year to 10 billion cubic feet per day in 2027 and 12 billion cubic feet per day by 2030.

The GCEO attributed the improvements in production largely to enhanced operational stability and infrastructure recovery across the country’s oil-producing assets.

He disclosed that Nigeria’s crude export terminals had recorded an average recovery factor of 98 per cent between April 2025 and May 2026, compared to operational lows of barely one per cent at the Bonny Oil and Gas Terminal in June 2022.

“The journey from near-zero terminal performance to approximately 98 per cent recovery across our export terminals represents what can be achieved through collaboration, operational discipline and sustained investments in security and infrastructure.

“Today, all major evacuation pipelines are fully operational. The Trans Niger Pipeline, Trans Escravos Pipeline, Trans Ramos Pipeline, Trans Forcados Pipeline, and the Oando-Brass line are all operating at 100 per cent availability. This level of reliability gives confidence to producers, investors, and international buyers.”

Ojulari also announced that NNPC maintained 100 per cent compliance with all Joint Venture cash-call obligations throughout 2025 and into June 2026, describing the development as critical to sustaining investor confidence and accelerating project execution.

He noted, however, that while NNPC had fully met its financial obligations, some Joint Venture partners remained in partial or significant default, forcing the national oil company to shoulder additional funding responsibilities in some ventures.

“Our commitment to our Joint Venture obligations remains absolute. We have sustained 100 per cent compliance because we understand that credibility and trust are fundamental to long-term partnerships.

“Our objective remains clear: to support the industry in achieving two million barrels of crude oil production per day while ensuring projects are not delayed because of funding constraints.”

Beyond operational performance, Ojulari highlighted several strategic commercial milestones recorded by the company over the past year.

He said NNPC had signed landmark Gas Sale and Purchase Agreements covering 1.29 billion standard cubic feet per day of long-term LNG feed gas and another 750 million standard cubic feet per day for domestic industrial gas supply to DFL FZE and Dangote Refinery.

According to him, the agreements are expected to unlock more than $20bn in associated investments, with seven additional commercial transactions already under negotiation.

He further disclosed that NNPC resumed full monthly remittances to the Federation Account in July 2025, reinstated monthly business performance reporting and hosted its first-ever earnings call in November 2025 as part of efforts to deepen transparency and strengthen investor confidence.

Speaking on the broader outlook for Africa’s energy industry, Ojulari urged governments, investors, regulators and operators to deepen collaboration rather than pursue isolated investments.

He argued that fragmented partnerships remain one of the biggest constraints to Africa’s energy transformation despite the continent’s abundant oil and gas resources.

“The future of African energy will not be determined solely by the resources beneath our soil, but by the quality of the partnerships we forge above it. At NNPC Limited, we see ourselves not just as an energy producer but as an ecosystem builder, connecting capital, technology, policy, talent, and markets to create lasting value for Nigeria and Africa.

“We must move beyond transactional relationships to strategic partnerships; beyond isolated projects to integrated value chains; and beyond exporting raw resources to building competitive industrial economies. The opportunity before us is extraordinary. The responsibility is ours. And the time to act is now.”

He noted that although Africa holds approximately 17 per cent of global natural gas reserves alongside vast crude oil and renewable energy resources, the continent still receives only a small fraction of global energy investment.

According to him, stronger collaboration among governments, national oil companies, financiers, technology providers, regulators, and academia will be essential to unlocking Africa’s full energy potential.

NNPC Limited has intensified its commercial transformation since becoming a fully incorporated company under the Petroleum Industry Act. Over the past year, the company has focused on improving operational efficiency, reducing production costs, increasing transparency, and attracting fresh investments into Nigeria’s oil and gas sector.

The latest scorecard comes as the Federal Government pursues higher crude oil production, expanded gas utilisation and stronger investor confidence through reforms, infrastructure upgrades and enhanced security across oil-producing assets.

The cost reduction is a critical factor in improving Nigeria’s competitiveness, particularly as global oil companies increasingly prioritise lower-cost, lower-carbon projects when allocating investment capital.

Now in its 25th year, the NOG Energy Week is Africa’s premier oil, gas and energy conference and exhibition, bringing together global energy leaders, policymakers, investors and innovators to discuss the future of energy, sustainability and industrial growth in Nigeria and beyond.