Nigeria’s oil revenue has declined by 43% despite a rebound in oil production, according to the latest Budget Implementation Report for the fourth quarter of 2024. The country’s gross profit from crude and gas sales fell to 1.08 trillion, down from 1.90 trillion in 2023, representing a 43.32% decline. This decrease in revenue highlights a shift towards taxes and royalties as the dominant contributors to the country’s oil and gas revenue.
The total oil and gas revenue before deductions stood at 15.07 trillion in 2024, short of the budgeted 19.99 trillion by 4.93 trillion or 24.65%. The decline in oil revenue was offset by an increase in taxes and royalties, with Petroleum Profit Tax and Company Income Tax generating 6 trillion, while royalties brought in 6.99 trillion, nearly triple the previous year’s figure.
The Nigerian Upstream Petroleum Regulatory Commission reported a 12.6% increase in crude oil production, with 442.21 million barrels produced in 2024, up from 2023. However, production reached only about 80% of the government’s projection, due to ongoing infrastructure constraints, crude theft, and underinvestment.
The increase in oil revenue was largely driven by stronger receipts from royalties, penalties, and exchange rate gains, rather than higher crude export volumes. The exchange-rate gain soared to 4.24 trillion in 2024, up from 791.88 billion in 2023, following the naira’s steep depreciation after exchange rate liberalisation.
After accounting for all deductions, the net oil revenue for 2024 stood at 12.95 trillion, against a budget target of 16.98 trillion, a difference of 4.03 trillion or 23.74%. This represents a 168.83% increase from the 4.82 trillion realised in 2023.
The significant growth in oil revenue was also driven by incidental oil revenue from royalty recovery and marginal field settlements, which climbed to 347.75 billion from 155.99 billion, a growth of 122.93%. Additionally, gas-flaring penalties rose to 391.26 billion, up 178% from 2023, while pipeline-fee income increased to 35.2 billion.
The increase in oil revenue is a positive development for Nigeria’s economy, but the country still faces challenges in meeting its production targets and addressing infrastructure constraints and crude theft. The government will need to continue to work on addressing these issues to ensure sustained growth in the oil and gas sector.