Crude Oil Revenue Drops By 43%

Despite a recovery in oil production, Nigeria experienced a significant drop of N824.66 billion in gross profit from crude oil and gas sales in 2024. This figure was revealed in the Fourth Quarter 2024 Budget Implementation Report, released by the Budget Office of the Federation.

Data from the report revealed that gross profit from crude and gas sales decreased to N1.08 trillion during the year, from N1.90 trillion in 2023, representing a 43.32 percent decline.

The 2024 performance was also 26.3 percent below the government’s budgeted target of N1.46 trillion, underscoring the persistence of weak fiscal inflows from the petroleum sector despite policy reforms aimed at boosting revenue.

The data indicated that the total oil and gas revenue before deductions stood at N15.07 trillion in 2024, against a budget of N19.99 trillion. This means that actual inflows fell short of the budget by N4.93 trillion or 24.65 percent.

Compared with the previous year’s total of N8.36 trillion, however, oil and gas inflows almost doubled, showing an 80.33 percent improvement. The PUNCH observed that the year-on-year increase was largely driven by stronger receipts from royalties, penalties, and exchange rate gains following the unification of the naira, rather than from higher crude export volumes.

The quarterly pattern showed that oil receipts rose from N3.35 trillion in the first quarter to N3.91 trillion in the fourth quarter, but remained consistently below the projected quarterly average of N4.99 trillion.

This underperformance reflects both lower-than-expected realised 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 percent of total oil and gas revenue in 2024, highlighting the structural shift in government earnings toward taxes, royalties, and penalties.

The Petroleum Profit Tax and Company Income Tax on gas operations brought in N6.00trn, representing nearly 40 per cent of all oil inflows, while oil and gas royalties alone generated N6.99 trillion—an increase of 179.74 per cent compared with N2.50 trillion in 2023. Officials attributed this rise to improved compliance monitoring and the conversion of marginal fields and assets under the Petroleum Industry Act.

Other revenue streams also performed strongly. Gas-flaring penalties yielded N391.26 billion, up 178 percent from N140.54 billion 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 N347.75 billion from N155.99 billion a year earlier, a growth of 122.93 per cent, while miscellaneous income, mainly from pipeline fees, increased to N35.2 billion from N16.38 billion.

One of the most significant contributors to the apparent growth in oil revenue was the exchange-rate gain, which soared to N4.24 trillion in 2024 from N791.88 billion 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 N12.95 trillion, against a budget target of N16.98 trillion, a difference of N4.03 trillion or 23.74 per cent. When compared with the N4.82 trillion realised in 2023, the 2024 outcome represents a 168.83 per cent increase.

While the figures appear positive on paper, The PUNCH observed that much of the gain came from exchange-rate effects rather than improved operational performance or higher crude proceeds.

Oil Production Surge

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 percent, 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.

Monthly data showed that production stabilised after the second quarter. Average output slipped briefly to 1.29 million bpd in April 2024—when several terminals underwent maintenance—but recovered to 1.49 million bpd in December, the highest level of the year. The year-end figure was 12 per cent higher than December 2023’s 1.33 million bpd, signalling a firmer footing heading into 2025.

Total liquids—comprising crude oil and condensates—amounted to 492.34 million barrels in 2024, compared with 451.09 million barrels in 2023, translating to a 9.14 per cent increase.

Crude oil made up roughly 89.8 per cent of total liquids, while condensates contributed the remaining 10.2 per cent. The condensate share slipped slightly from 2023, underscoring that the recovery was driven mainly by higher crude throughput rather than condensate output.

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 percent of the government’s projection, a key reason oil-revenue inflows missed the 2024 budget despite nominal gains from exchange-rate revaluation.

Experts have said that maintaining production above 1.6 mbpd will depend on stronger security along oil corridors, timely field redevelopments, and consistent application of the Petroleum Industry Act (PIA) reforms.

The NUPRC has pledged to enhance metering accuracy, tighten compliance enforcement, and foster collaboration with operators to stabilise supply.

THE PUNCH