Nigeria’s Crude Oil and Gas Profits Plunge by N824bn in 2024 Despite Higher Production

Nigeria’s gross profit from crude oil and gas sales fell sharply by N824.66 billion in 2024, according to the Budget Office of the Federation’s latest Fourth Quarter Budget Implementation Report, despite a modest rebound in crude production.

The report shows that gross profit dropped to N1.08 trillion in 2024 from N1.90 trillion in 2023—a 43.3% decline—and fell 26.3% below the government’s budget target of N1.46 trillion. Total oil and gas revenue before deductions reached N15.07 trillion, against a budget of N19.99 trillion, missing the target by N4.93 trillion or 24.65%. Compared to 2023’s N8.36 trillion, however, inflows nearly doubled, largely due to stronger receipts from royalties, penalties, and exchange-rate gains following the naira’s unification, rather than higher crude exports.

Quarterly data indicated oil revenue rose from N3.35 trillion in Q1 to N3.91 trillion in Q4 but remained below the projected average of N4.99 trillion per quarter. Crude output fluctuated between 1.4 and 1.6 million barrels per day, below the budgeted 1.78 million bpd, contributing to the shortfall in fiscal inflows.

Gross profit from crude and gas accounted for only eight percent of total oil and gas revenue, highlighting a shift toward taxes, royalties, and penalties. Petroleum Profit Tax and Company Income Tax on gas operations generated N6 trillion, or nearly 40% of oil inflows, while royalties surged to N6.99 trillion, a 179.7% increase from 2023. Gas-flaring penalties, incidental revenues, and exchange-rate gains also contributed significantly, with the latter soaring to N4.24 trillion due to naira depreciation.

Net oil revenue after deductions stood at N12.95 trillion, below the budgeted N16.98 trillion but representing a 168.8% increase from 2023. While on paper the figures suggest growth, much of the gain came from exchange-rate effects rather than improved crude earnings.

Crude production rose to 442.21 million barrels in 2024 from 392.66 million barrels in 2023, averaging 1.43 million bpd. The increase reflected reduced vandalism, better coordination among operators, and marginal field outputs, though production still fell short of the 1.78 million bpd budget target, achieving only about 80% of projected output.

Experts attribute the decline in crude earnings despite higher production to structural inefficiencies, poor transparency, and underreported domestic crude transactions. Forward-sale agreements, crude-for-loan deals, and opaque swap arrangements diverted significant volumes of crude away from federal revenue, while issues with NNPC remittances further complicated fiscal reporting.

Energy law and finance experts, including Prof. Dayo Ayoade of Lagos State University and Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise, warned that revenue shortfalls reflect weak monitoring, under-investment, and lack of full disclosure on oil transactions. They emphasized the need for greater transparency, accurate reporting, and proper accounting of domestic swaps and forward sales to restore confidence in Nigeria’s petroleum fiscal system.

Despite these challenges, NNPCL’s current management under Bayo Ojulari has improved professionalism and openness, though experts insist that full disclosure of crude swap and forward-sale deals is essential to align production with revenue and sustain investor confidence.