Nigeria’s gross profit from crude oil and gas sales experienced a sharp plunge of N824.66 billion in 2024, despite a reported rebound in oil production, according to figures released in the latest Budget Implementation Report for the fourth quarter of 2024 by the Budget Office of the Federation.
Data from the report revealed that the gross profit from crude and gas sales fell to N1.08 trillion during the year, a significant decline from N1.90 trillion recorded in 2023, representing a 43.32 per cent decline.
The 2024 performance also fell 26.3 per cent below the government’s budgeted target of N1.46 trillion, underscoring the persistence of weak fiscal inflows from the petroleum sector despite ongoing policy reforms aimed at boosting revenue.
The data indicated that the total oil and gas revenue before deductions stood at N15.07 trillion in 2024, falling short of the budget of N19.99 trillion by N4.93 trillion, or 24.65 per cent.
However, when compared with the previous year’s total of N8.36 trillion, oil and gas inflows almost doubled, showing an 80.33 per cent improvement. The PUNCH observed that this year-on-year increase was largely driven by stronger receipts from royalties, penalties, and exchange rate gains following the unification of the naira, rather than from higher crude export volumes.
The quarterly pattern showed that oil receipts rose from N3.35 trillion in the first quarter to N3.91 trillion in the fourth quarter but consistently remained below the projected quarterly average of N4.99 trillion.
This underperformance reflects both lower-than-expected realized prices and production shortfalls relative to budget assumptions, as Nigeria’s crude output fluctuated between 1.4 and 1.6 million barrels per day, remaining 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.
The Petroleum Profit Tax and Company Income Tax on gas operations brought in N6.00 trillion, representing nearly 40 per cent of all oil inflows, while oil and gas royalties alone generated N6.99 trillion, an increase of 179.74 per cent compared with N2.50 trillion 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 N391.26 billion, up 178 per cent from N140.54 billion 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 N347.75 billion from N155.99 billion a year earlier, a growth of 122.93 per cent, while miscellaneous income, mainly from pipeline fees, increased to N35.2 billion from N16.38 billion.
One of the most significant contributors to the apparent growth in total oil revenue was the exchange-rate gain, which soared to N4.24 trillion in 2024 from N791.88 billion in 2023, an increase of over 435 per cent.
The surge followed the naira’s steep depreciation after exchange rate liberalization, which inflated dollar-denominated oil earnings when converted into local currency.
After accounting for all deductions, net oil revenue for 2024 stood at N12.95 trillion, against a budget target of N16.98 trillion, a difference of N4.03 trillion or 23.74 per cent. When compared with the N4.82 trillion realized in 2023, the 2024 outcome represents a 168.83 per cent increase.
While the figures appear positive on paper, The PUNCH observed that much of the gain came from exchange-rate effects rather than improved operational performance or higher crude proceeds.
