NNPC Earns N453.4bn from Frontier Exploration Fund, Posts 36% Shortfall

Emmanuel Addeh in Abuja

The Nigerian National Petroleum Company Limited (NNPC Ltd) received over N453.455 billion in the 12 months of 2025 from the newly established Frontier Exploration Fund (FEF), latest data from the Federation Account Allocation Committee (FAAC), has shown.

The figure represents 30 per cent of the total Production Sharing Contract (PSC) profit oil realised during the year, in line with statutory provisions that allocate the funds to frontier exploration, 30 per cent as NNPC management fee, and 40 per cent to the Federation Account.

The frontier exploration fund is designed to finance hydrocarbon exploration activities in Nigeria’s frontier basins, areas outside the traditional Niger Delta producing belt where commercial discoveries have yet to be fully established. These include: the Chad Basin in the North-east, the Sokoto Basin in the North-west, the Bida Basin in North-central Nigeria, the Benue Trough, and parts of the Dahomey basin.

Exploration in these locations is aimed at expanding Nigeria’s reserves base, reducing regional concentration of oil production, and enhancing long-term energy security. Activities typically involve seismic data acquisition, exploratory drilling, geological studies, and appraisal campaigns.

The fund was floated under the Petroleum Industry Act (PIA) because frontier basins are generally high-risk and capital-intensive, and therefore would require sustained funding  considered critical to maintaining exploration momentum.

However, THISDAY’s checks indicated that the N453.455 billion realised for frontier exploration fell short of the N710.520 billion budgeted for the year, leaving a deficit of N257.066 billion.

In percentage terms, the Fund performed at approximately 63.8 per cent of its annual projection, reflecting a 36.2 per cent negative variance. The underperformance mirrors the general shortfall in PSC profit oil earnings recorded in 2025.

Besides, total PSC profit oil for the year stood at N1.511 trillion, compared to a budgeted N2.368 trillion. This created an overall deficit of N856.885 billion, equivalent to a 36.2 per cent shortfall. Because the Frontier Exploration Fund is financed strictly as 30 per cent of realised PSC profits, the lower revenue base automatically reduced the amount available for frontier basin activities.

The same proportional impact was observed in the NNPC management fee line. Also pegged at 30 per cent of PSC profit oil, management fee receipts amounted to N453.455 billion in 2025, against a budget of N710.520 billion. This represents an identical deficit of N257.066 billion and the same 36.2 per cent variance.

The federation account, entitled to 40 per cent of PSC profit oil, received N604.606 billion during the year. This was significantly below the N947.360 billion budgeted, resulting in a shortfall of N342.754 billion. Like the other lines, the Federation share recorded a 36.2 per cent negative variance, underscoring the across-the-board effect of weaker PSC profit oil performance.

A review of monthly data showed considerable volatility throughout the year. PSC profit oil receipts began at N105.910 billion in January and rose to N127.668 billion in February. March recorded N204.963 billion, while April and May posted N121.931 billion and N129.326 billion respectively.

June witnessed a sharp drop to N22.774 billion before improving to N84.481 billion in July. Strong inflows were recorded in August at N263.125 billion and peaked in September at N275.379 billion, the highest monthly performance of the year. However, receipts declined again to N36.820 billion in October, rose to N112.318 billion in November, and fell to N26.820 billion in December.

These fluctuations directly shaped cumulative allocations to the frontier exploration fund. Since contributions to the fund are tied strictly to realised profit oil rather than fixed nominal amounts, the uneven monthly earnings resulted in a lower year-end total than budgeted.

There was controversy over the fund last year when the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, suggested that the fund was not be judiciously deployed.

This stirred a response from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) which maintained that all the funds due the NNPC to carry out frontier activities had been approved and released.

But beyond PSC profit distribution, the report also showed that NNPC had projected N3.254 trillion as “NNPC Limited calendarised interim dividend to Federation Account” in 2025. No remittance was recorded under this line during the period under review, creating a full variance of N3.254 trillion.

Consequently, the overall grand total budgeted for PSC profit distribution and interim dividends stood at N5.622 trillion for the year. Actual remittances amounted to N1.511 trillion, leaving a cumulative variance of N4.111 trillion.

The N453.455 billion realised in 2025 therefore represented a significant funding pool for ongoing exploration efforts. However, the N257.066 billion gap relative to budget underscores the impact of lower-than-expected PSC profit oil earnings on strategic upstream expansion.

Overall, the report highlighted a year in which statutory allocations were maintained in percentage terms but constrained by revenue underperformance, with PSC profit oil down 36.2 per cent from projections.