Nigeria’s Oil Revenue Plunges 43% Despite Production Rebound, Budget Office Report Reveals

By Emmanuel Kwada

Nigeria’s earnings from crude oil and gas sales dropped sharply by 43.32 percent in 2024, falling to ₦1.08 trillion from ₦1.90 trillion in 2023, despite a notable increase 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 decline, amounting to ₦824.66 billion, underscores a shift in revenue composition, with crude and gas sales contributing just about 8 percent to total oil and gas inflows.

This occurred even as the country experienced a production rebound, highlighting persistent challenges in monetizing output.

Total oil and gas revenue before deductions reached ₦15.07 trillion, falling short of the budgeted ₦19.99 trillion by ₦4.93 trillion, or 24.65 percent. After deductions, net oil revenue stood at ₦12.95 trillion—below the ₦16.98 trillion target but a significant improvement over the ₦4.82 trillion recorded in 2023, representing a 168.83 percent year-on-year increase.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported crude oil production rising 12.6 percent to 442.21 million barrels in 2024, up from the previous year.

Daily average production climbed to 1.43 million barrels per day (mbpd) from 1.27 mbpd, with a peak of 1.49 mbpd in December—the highest for the year. Total liquids, including crude and condensates, totaled 492.34 million barrels, compared to 451.09 million barrels in 2023.

However, output achieved only about 80 percent of government projections, hampered by infrastructure constraints, crude theft, and underinvestment, analysts noted.

The year-on-year revenue growth was driven primarily by non-production factors. Petroleum Profit Tax and Company Income Tax generated ₦6 trillion, while royalties surged to ₦6.99 trillion—nearly triple the prior year’s figure—bolstered by enhanced compliance and reforms under the Petroleum Industry Act (PIA).

Gas-flaring penalties jumped 178 percent to ₦391.26 billion. Incidental revenue from royalty recovery and marginal-field settlements more than doubled to ₦347.75 billion from ₦155.99 billion, a 122.93 percent increase. Pipeline-fee income rose to ₦35.2 billion from ₦16.38 billion.

A standout contributor was exchange-rate gains, which soared over 435 percent to ₦4.24 trillion from ₦791.88 billion in 2023. This surge followed the naira’s depreciation after currency liberalization, inflating dollar-denominated earnings in local currency terms.

Quarterly receipts showed steady improvement, from ₦3.35 trillion in Q1 to ₦3.91 trillion in Q4, though consistently below the projected quarterly average of ₦4.99 trillion.

Compared to 2023’s total oil and gas inflows of ₦8.36 trillion, 2024 marked an 80.33 percent improvement. Experts attribute the apparent paradox—higher production but lower crude sales revenue—to the dominance of taxes, royalties, penalties, and exchange gains over direct export earnings.

The report signals a structural shift in Nigeria’s oil sector revenue model, with traditional crude sales diminishing in relative importance amid PIA-driven changes and macroeconomic adjustments.