Nigeria’s gross earnings from crude oil and gas sales dropped sharply by N824.66 billion in 2024, despite a rebound in oil production, according to the Budget Implementation Report for Q4 2024 released by the Budget Office of the Federation.
The report showed that gross profit from crude and gas sales fell to N1.08 trillion in 2024 from N1.90 trillion in 2023, marking a 43.32% decline. This also fell 26.3% below the government’s budgeted target of N1.46 trillion, highlighting persistent weaknesses in fiscal inflows from the petroleum sector despite ongoing policy reforms.
Total oil and gas revenue before deductions stood at N15.07 trillion in 2024, short of the N19.99 trillion budgeted, a deficit of N4.93 trillion (24.65%). However, compared with N8.36 trillion in 2023, overall inflows nearly doubled, an 80.33% increase largely driven by royalties, penalties, and exchange rate gains following naira unification, rather than higher crude export volumes.
Quarterly data showed oil receipts rising from N3.35 trillion in Q1 to N3.91 trillion in Q4, still below the projected quarterly average of N4.99 trillion. The shortfall reflected both lower-than-expected realized prices and production below the budgeted 1.78 million barrels per day, as output fluctuated between 1.4 and 1.6 million bpd.
Gross profit from crude accounted for only about 8% of total oil and gas revenue in 2024, showing a structural shift in government earnings toward taxes, royalties, and penalties. Petroleum Profit Tax and Company Income Tax on gas operations contributed N6 trillion (around 40% of inflows), while oil and gas royalties rose sharply to N6.99 trillion from N2.50 trillion in 2023, boosted by improved compliance and marginal field conversions under the Petroleum Industry Act.
Other revenue streams performed strongly: gas-flaring penalties yielded N391.26 billion, incidental oil revenue climbed to N347.75 billion, and miscellaneous income rose to N35.2 billion. Exchange-rate gains surged to N4.24 trillion from N791.88 billion, a 435% increase due to naira depreciation.
After deductions, net oil revenue stood at N12.95 trillion, below the N16.98 trillion budget target, but up 168.83% from N4.82 trillion in 2023. Much of the gain came from exchange-rate effects rather than higher operational performance.
Oil Production Shows Gradual Recovery
Nigeria’s crude-oil production rose to 442.21 million barrels in 2024 from 392.66 million barrels in 2023, a 12.62% increase. Average daily output was 1.43 million bpd, up from 1.27 million bpd the previous year. Production stabilized after Q2, with a slight dip in April due to maintenance, recovering to 1.49 million bpd in December. Total liquids, including condensates, reached 492.34 million barrels, with crude comprising 89.8% of the total.
Despite improvements, output remained below the fiscal target of 1.78 million bpd due to infrastructure constraints, underinvestment, and oil theft, with actual production achieving only 80% of the budgeted target.
Revenue Transparency and Challenges
NNPCL remittances to the government have faced scrutiny, with the World Bank noting that only half of revenue gains from subsidy removal were transferred to the Federation Account in 2024, leaving a N500 billion deficit. The Federal Accounts Allocation Committee extended reconciliation of payments from revenue-generating agencies to December 2024 to address outstanding discrepancies.
Periscope Consulting, engaged by the Nigeria Governors’ Forum, had previously alleged under-remittances of $42.37 billion by NNPCL between 2011 and 2017, prompting further investigation. Forward-sale agreements, opaque crude-for-cash deals, and undisclosed loan repayments were also cited as factors reducing actual revenue inflows.
Experts Weigh In
Energy experts warned that declining crude earnings despite rising production reflect structural inefficiencies, weak accountability, and lack of transparency in the petroleum sector. Prof. Dayo Ayoade of Lagos State University noted that poor record-keeping and untracked crude theft contributed to the discrepancy between production and revenue.
Ademola Adigun of AHA Strategies pointed to crude-for-loan deals and forward-sale arrangements, while Dr. Aliyu Ilias of CSA Advisory highlighted underreported domestic crude transactions. Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise attributed declining profits to prior forward-sale agreements.
Experts emphasized that while professionalism in NNPCL has improved under current management, greater transparency in crude swap and forward-sale deals is critical to restoring confidence and ensuring accurate revenue reporting.
Crude production and revenue remain pivotal to Nigeria’s economy, but structural reforms, better oversight, and transparency are essential for aligning earnings with production and stabilizing fiscal inflows.
