The Central Bank of Nigeria has identified ageing pipeline infrastructure and operational inefficiencies as key factors contributing to a significant 24.72% decline in oil revenue for the third quarter of 2024.
The decline saw oil revenue drop to N1.30 trillion, down from the previous quarter, primarily due to lower receipts from petroleum profit tax and royalties.
The oil revenue for the third quarter of 2024 also fell short of the quarterly target by 75.39%.
This shortfall was largely attributed to frequent shut-ins resulting from deteriorating pipelines and installations, further exacerbating the decline in receipts from petroleum profit tax and royalties.
The report read, “Oil revenue, however, fell by 24.72 per cent to N1.30tn, relative to the level in Q2 2024 on account of lower receipts from petroleum profit tax and royalties.
“It was also 75.39 per cent short of the quarterly target due to shut-ins, arising from ageing oil pipelines and installations.”
Despite a modest increase in crude oil production to 1.33 million barrels per day (mbpd) from 1.27 mbpd in the previous quarter, Nigeria’s oil revenue performance was still severely impacted.
The ageing infrastructure not only reduced efficiency but also undermined the country’s ability to meet its OPEC production quota.
Global factors further exacerbated the challenges faced by Nigeria’s oil sector, with the average spot price of Bonny Light crude falling by 5.45% to $82.23 per barrel due to subdued global demand.
Similar declines were noted in other crude benchmarks like Brent and the OPEC Reference Basket.
Despite these setbacks in the oil sector, Nigeria’s economy grew by 3.46% in Q3 2024, up from 3.19% in Q2, largely driven by the non-oil sector, which contributed 3.18 percentage points to the overall GDP growth.
The growth of Nigeria’s oil sector slowed to 5.17% year-on-year in Q3 2024, down from 10.15% in the previous quarter, as operational inefficiencies and declining crude oil prices took a significant toll.
The fiscal implications were severe, with federally collected revenue falling 23.71% short of the budget benchmark, despite a 7.48% quarter-on-quarter increase.
