Decline in Nigeria’s Crude Oil and Gas Revenue Despite Increased Production
Nigeria’s gross profit from crude oil and gas sales experienced a significant decline of N824.66bn in 2024, despite a rebound in oil production, according to the latest Budget Implementation Report for the fourth quarter of 2024 released by the Budget Office of the Federation. The data revealed that gross profit from crude and gas sales fell to N1.08tn during the year, down from N1.90tn in 2023, representing a 43.32 per cent drop.
This performance was also 26.3 per cent below the government’s budgeted target of N1.46tn, highlighting the persistent challenges in fiscal inflows from the petroleum sector, even with policy reforms aimed at boosting revenue. The total oil and gas revenue before deductions stood at N15.07tn in 2024, compared to a budget of N19.99tn, meaning actual inflows fell short by N4.93tn or 24.65 per cent.
Despite the overall decline, oil and gas inflows nearly doubled compared to the previous year’s total of N8.36tn, showing an 80.33 per cent improvement. This growth was largely attributed to stronger receipts from royalties, penalties, and exchange rate gains following the unification of the naira, rather than higher crude export volumes.
Quarterly Performance and Underperformance
Oil receipts rose from N3.35tn in the first quarter to N3.91tn in the fourth quarter, but remained consistently below the projected quarterly average of N4.99tn. This underperformance was due to lower-than-expected realized prices and production shortfalls relative to budget assumptions. Nigeria’s crude output fluctuated between 1.4 and 1.6 million barrels per day, below the 1.78 million barrels per day target used in the 2024 budget.
Despite being the country’s traditional fiscal anchor, gross profit from crude oil and gas sales accounted for only about eight per cent of total oil and gas revenue in 2024, indicating a structural shift toward taxes, royalties, and penalties. The Petroleum Profit Tax and Company Income Tax on gas operations brought in N6.00tn, representing nearly 40 per cent of all oil inflows, while oil and gas royalties alone generated N6.99tn—an increase of 179.74 per cent compared with N2.50tn in 2023.
Exchange Rate Gains and Other Revenue Streams
Other revenue streams performed strongly as well. Gas-flaring penalties yielded N391.26bn, up 178 per cent from N140.54bn in 2023, even though the budget had made no provision for this category. Incidental oil revenue from royalty recovery and marginal field settlements climbed to N347.75bn from N155.99bn a year earlier, a growth of 122.93 per cent, while miscellaneous income, mainly from pipeline fees, increased to N35.2bn from N16.38bn.
One of the most significant contributors to the apparent growth in oil revenue was the exchange-rate gain, which soared to N4.24tn in 2024 from N791.88bn in 2023—an increase of over 435 per cent. The surge followed the naira’s steep depreciation after exchange rate liberalisation, which inflated dollar-denominated oil earnings when converted into local currency.
After accounting for all deductions, net oil revenue for 2024 stood at N12.95tn, against a budget target of N16.98tn, a difference of N4.03tn or 23.74 per cent. When compared with the N4.82tn realised in 2023, the 2024 outcome represents a 168.83 per cent increase.
Oil Production Surge and Challenges
Nigeria’s crude-oil production inched up in 2024, with data from the Nigerian Upstream Petroleum Regulatory Commission showing that output rose to 442.21 million barrels, compared with 392.66 million barrels in 2023. The increase of 49.55 million barrels, or 12.62 per cent, marked a modest recovery in upstream performance following three years of volatility and output disruptions.
On a daily-average basis, Nigeria pumped about 1.43 million barrels per day in 2024, up from 1.27 million barrels per day the previous year. The gradual improvement reflected reduced vandalism along major crude-evacuation corridors, improved coordination among joint-venture partners, and incremental barrels from marginal-field operators licensed under the Petroleum Industry Act.
Concerns Over Transparency and Revenue Management
Despite the increase, Nigeria’s output still lagged its fiscal target of 1.78 million bpd, reflecting lingering infrastructure constraints, under-investment, and crude theft. The shortfall means that actual production achieved only about 80 per cent of the government’s projection, a key reason oil-revenue inflows missed the 2024 budget despite nominal gains from exchange-rate revaluation.
Experts have raised concerns over the transparency and management of oil revenues, citing opaque crude-for-cash agreements and undisclosed loan repayments that have tied up part of Nigeria’s oil output. They argue that the current situation suggests poor statistics, weak exporting obligations, and weak monitoring within the petroleum sector.