Umar Ajiya, chief financial officer, NNPC. (Image source: NNPC)

The Nigerian National Petroleum Corporation (NNPC) has declared a net profit of N3.297 trillion for the year ended December 2023 in its 2023 audited financial statement (AFS)

This marks not only an increase of more than N700bn (28%) when compared to the 2022 profit of N2.548 trillion, but also the company's best performance since its inception in 1977. 

NNPC has been on a consistent growth curve from 2020, when it posted its ‘first ever’ profit of N287bn, followed by a record N674.1bn profit in 2021. The corporation is now looking to announce an initial public offer (IPO) following approval from shareholders and members of the board.

Strategic foresight and operational resilience

“Our fiscal performance reflects both strategic foresight and operational resilience. Despite inherent challenges of our operational and economic environment, we have improved the productivity and the financial performance of this great company,” said Umar Ajiya, chief financial officer, NNPC.

Ajiya attributed the positive results to the Petroleum Industry Act (PIA) 2021, which safeguards national energy security and profitability even while ensuring investor interests. Holders can benefit massively from new fiscal provisions and tax rate under the PIA if they consider conversion from oil prospecting license (OPL) to petroleum prospecting license (PPL) and from oil mining lease (OML) to petroleum mining lease (PML). Upon conversion from OPL to PPL, holders are liable to pay 15% instead of 65.75% as previously mandated by the Petroleum Profits Tax Act (PPTA), and 30% instead of 85% for holders converted from PML to OML, both applicable to onshore and shallow water areas.

NNPC holds a 60% interest in OML 102 that is located in shallow waters, housing the Ntokon oil and gas field from where the 40% shareholder TotalEnergies announced promising discoveries in June. 

TotalEnergies has renewed its production license in OML 130 in May for a further 20 years, bringing its operations under the terms of the PIA. Sanctioning deepwater projects as per the new regime is crucial to boosting Nigeria's production output, which NNPC is targeting at 2mn barrels per day by the end of the year.

Last year, Nigeria has attracted international interests for gas exploration from countries such as Argentina. 

With the final investment decision (FID) reached in July by TotalEnergies, as the operator of OML 58 onshore license with a 40% interest, for the development of the Ubeta gas field, where NNPC holds a 60% interest, the corporation is up to a steady start to expect healthy financial results in the coming years.