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 in 2024, dropping by N824.66bn 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 report 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 decline. This performance was also 26.3 per cent below the government’s budgeted target of N1.46tn, highlighting the persistence of weak fiscal inflows from the petroleum sector despite 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. This means that actual inflows fell short of the budget by N4.93tn or 24.65 per cent. However, compared with the previous year’s total of N8.36tn, oil and gas inflows almost doubled, showing an 80.33 per cent improvement. The increase was largely driven by 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 reflects both 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, highlighting the structural shift in government earnings toward taxes, royalties, and penalties.
Revenue Streams and Exchange Rate Gains
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. 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 N391.26bn, 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.
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 Accountability
Experts have raised concerns over the decline in crude oil earnings despite a rebound in oil production, describing the development as a sign of poor transparency, weak data integrity, and structural inefficiency in the petroleum sector.
Energy Law Professor at the Lagos State University, Prof Dayo Ayoade, said the decline in earnings despite improved production showed that the country’s oil industry was still plagued by poor record-keeping and weak accountability. He highlighted the need for better transparency and planning to ensure sustainable revenue generation.
The situation has been compounded by NNPCL’s failure to remit any interim dividends into the Federation Account in 2025. Experts have called for greater transparency and accountability in the petroleum sector to restore confidence in oil revenue reporting.
Ongoing Investigations and Reconciliation Efforts
The Federal Government, through the Federal Accounts Allocation Committee, extended the ongoing probe and reconciliation of payments made by revenue-generating agencies, including the Nigerian National Petroleum Company Limited, to December 2024, following unresolved discrepancies in remittances.
According to documents from the October 2025 meeting of the Federation Account Allocation Committee, obtained by The PUNCH, the extension was approved after the sub-committee in charge of the monthly reconciliation meetings reported that several outstanding payments were yet to be fully reconciled.
