Nigeria’s gross profit from crude and gas sales declined by 43 per cent, contributing only about 8 per cent of the total oil and gas revenue, even though oil production improved. This is based on data contained in the latest Budget Implementation Report for the fourth quarter of 2024 released by the Budget Office of the Federation.
Oil revenue dropped by ₦824.66 billion to ₦1.08 trillion for the year, down from ₦1.90 trillion in 2023 — reflecting a 43.32 per cent year-on-year decrease.
The decline underscores a shift toward taxes and royalties as the major revenue sources. Petroleum Profit Tax and Company Income Tax generated ₦6 trillion, while royalties contributed ₦6.99 trillion — almost three times the previous year’s figure, supported by stronger compliance and reforms under the Petroleum Industry Act.
Total oil and gas revenue before deductions reached ₦15.07 trillion in 2024, compared to a budgeted ₦19.99 trillion. This indicates a shortfall of ₦4.93 trillion, or 24.65 per cent.
Gas-flaring penalties increased significantly to ₦391.26 billion, representing a 178 per cent rise from 2023. Revenue from royalty recovery and marginal-field settlements more than doubled, while earnings from pipeline fees rose to ₦35.2 billion.
A major boost came from exchange-rate gains, which jumped to ₦4.24 trillion from ₦791.88 billion in 2023, following the liberalisation of the currency regime.
After deductions, net oil revenue stood at ₦12.95 trillion — below the ₦16.98 trillion target but far above the ₦4.82 trillion recorded in 2023.
Data from the Nigerian Upstream Petroleum Regulatory Commission showed crude oil production rose to 442.21 million barrels in 2024, an increase of 12.6 per cent from the previous year. The nation’s daily average output climbed to 1.43 million barrels per day from 1.27 million barrels.
Production recovered strongly in the second half, reaching 1.49 million barrels per day in December — the year’s peak. Combined crude and condensate production hit 492.34 million barrels, up from 451.09 million barrels recorded in 2023.
Despite these improvements, overall production reached only about 80 per cent of the government’s projection. Analysts attribute the deficit to persistent infrastructure challenges, crude theft, and inadequate investment.
Compared to the previous year’s total of ₦8.36 trillion, total oil and gas inflows nearly doubled, marking an 80.33 per cent increase.
The year-on-year rise was driven mainly by higher receipts from royalties, penalties, and exchange rate gains due to the naira unification, rather than increased crude export volumes.
Quarterly figures showed oil receipts rose from ₦3.35 trillion in Q1 to ₦3.91 trillion in Q4, though still below the projected quarterly average of ₦4.99 trillion.
Incidental revenue from royalty recovery and marginal-field settlements surged to ₦347.75 billion from ₦155.99 billion, marking a 122.93 per cent increase. Miscellaneous income, mostly pipeline fees, climbed to ₦35.2 billion from ₦16.38 billion.
Exchange-rate gains were one of the largest contributors to the overall revenue rise, soaring to ₦4.24 trillion in 2024 from ₦791.88 billion in 2023 — a jump of more than 435 per cent.
The increase resulted from the steep depreciation of the naira after exchange-rate liberalisation, which significantly boosted the naira value of dollar-denominated oil earnings.
After all deductions were applied, net oil revenue for 2024 amounted to ₦12.95 trillion, compared to the budget benchmark of ₦16.98 trillion — a deficit of ₦4.03 trillion, or 23.74 per cent.
Compared with ₦4.82 trillion earned in 2023, the 2024 figure reflects a 168.83 per cent increase.