Nigeria’s earnings from crude oil and gas plunged by 43.3 per cent in 2024, despite a rebound in production, according to a new report by the Budget Office of the Federation (BOF). The report revealed that total gross profits from crude oil and gas dropped from ₦1.90 trillion in 2023 to ₦1.08 trillion in 2024, representing a loss of about ₦824.66 billion within a year. The sharp decline underscores Nigeria’s ongoing struggles to convert increased oil output into tangible fiscal revenue, largely due to operational inefficiencies, international market fluctuations, and mounting domestic challenges affecting the petroleum sector.
The Budget Office disclosed that overall oil and gas revenue before deductions stood at ₦15.07 trillion in 2024, significantly below the budget projection of ₦19.99 trillion. This represents a shortfall of nearly ₦4.92 trillion or 24.7 per cent. Despite the increase in production volumes, Nigeria fell short of its expected fiscal performance from the oil sector, a development the report attributed to a combination of lower realised prices, high production costs, exchange rate instability, and deductions made for various joint venture obligations and subsidies.
Interestingly, crude oil production recorded a notable recovery in 2024. The country produced approximately 442.21 million barrels of oil, compared to 392.66 million barrels in 2023. This indicates a 12.6 per cent year-on-year increase, showing a gradual improvement in output following years of decline due to oil theft, vandalism, and underinvestment. However, analysts say the increase was not enough to offset the impact of lower global oil prices and rising domestic operating expenses. The average daily production remained below the budget benchmark of 1.78 million barrels per day, with actual output hovering between 1.4 and 1.6 million barrels.
A breakdown of the figures showed that while crude earnings dropped, other income streams from the petroleum sector recorded substantial gains. Oil royalty collections surged by an impressive 179.7 per cent, rising from ₦2.50 trillion in 2023 to ₦6.99 trillion in 2024. The BOF attributed this to improved compliance by oil firms, stronger enforcement by regulatory agencies, and the effect of exchange rate devaluation, which increased the naira value of dollar-denominated receipts. Similarly, petroleum profit tax (PPT) and other levies showed modest improvements, though not enough to offset the overall decline in net profit from crude oil sales.
Economic experts have linked the paradoxical drop in crude profit despite higher output to the dual pressures of exchange rate volatility and international price instability. With the naira depreciating significantly in mid-2024 following foreign exchange reforms, the local value of oil revenues appeared higher, but in real terms, the country earned less due to dollar inflows being eroded by deductions and market distortions. Furthermore, the fall in crude oil prices to an average of around $78 per barrel in the latter half of 2024, down from over $90 in the previous year, also weighed heavily on earnings.
The report warned that the trend could have serious implications for Nigeria’s fiscal sustainability, especially given the nation’s heavy reliance on oil income for budgetary funding. It noted that the reduced profit margins may limit government spending capacity, affect capital project implementation, and increase the need for borrowing to fill revenue gaps. Economists have urged the Federal Government to strengthen efforts at curbing crude theft, improving transparency in the Nigerian National Petroleum Company Limited (NNPCL), and promoting new investments in exploration and refining to boost value addition.
Stakeholders have also stressed the importance of implementing the Petroleum Industry Act (PIA) in full to create a more competitive and transparent oil sector. According to the BOF, reforms in the sector remain crucial if Nigeria hopes to stabilise output, reduce losses, and attract the foreign investment needed to modernise infrastructure and expand refining capacity. The agency further advised that the government prioritise non-oil revenue diversification to mitigate the risks associated with fluctuating global energy markets.
Looking ahead, projections for 2025 suggest a cautious recovery, provided the government sustains its reforms and addresses the persistent challenges of pipeline vandalism, security threats in the Niger Delta, and foreign exchange constraints. Analysts believe that unless oil production consistently exceeds 1.7 million barrels per day and global oil prices remain above $85 per barrel, Nigeria may continue to experience volatility in its crude revenue performance.
In summary, the 43 per cent plunge in crude earnings, despite a rebound in output, reflects deeper structural problems within Nigeria’s oil and gas industry. While the rise in royalty collections and other revenues offers a glimmer of hope, experts agree that sustainable growth will require more than temporary production gains. It will depend on comprehensive policy consistency, fiscal discipline, and genuine diversification away from the overdependence on crude exports that continue to define the country’s economic vulnerability.
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