Nigeria has recorded a crude oil production shortfall of about 93.74 million barrels in the first eight months of 2025, raising concerns over adequate funding of the 2025 national budget.

The shortfall translates to about a $6.848 billion shortfall in oil revenue, which is a key component of budgetary funding.

The price of Nigeria’s Bonny Light crude oil averaged $73.06 per barrel, according to data obtained from the Central Bank of Nigeria, but the revenue shortfall attributable to production shortfall would be $7.03 billion when calculated with the 2025 budget benchmark of $75 per barrel.

Data obtained from the Nigerian Upstream Petroleum Regulatory Commission revealed that total crude oil and condensate output between January and August stood at 406.84 million barrels, representing an 18.27 per cent deficit against the 500.58 million barrels projected in the budget for the period.

The 2025 budget was predicated on a daily crude oil production target of 2.06 million barrels, but NUPRC data showed actual output averaged 1.673 million barrels per day during the eight-month period, indicating an average shortfall of 390,000 barrels per day. If the trend continues in the remaining four months of the year, the country would lose 47.58 million barrels in 122 days and about $3.56 billion in revenue.

A breakdown of the NUPRC data shows that the country missed its production target by 35.01 million barrels in the first quarter, amounting to a market value of $2.625 billion.

The shortfalls continued in the second quarter, with a total of 34.67 million barrels production losses valued at $2.592 billion. The third quarter is also trending in the same direction, with July data showing 10.78 million barrels ($808.5 million) and August showing 13.28 million barrels ($996 million) losses.

The Commission’s August 2025 report to the September Federation Account Allocation Committee meeting showed a revenue shortfall of ₦459.6 billion against its August 2025 budgetary target of ₦1.2 trillion, after remitting only ₦745 billion.

The revenue remittance for July was ₦723.168 billion. In these two months alone, the government recorded a combined revenue shortfall of ₦941.229 billion from the oil and gas sector.

The report noted an increase in collections in August, saying: “Total collection increased by ₦22.04 billion, equivalent to 3.05 percent when compared with July 2025. The increase in collection for the month of August 2025 can be attributed to a revenue drive that led to improvement in almost all the revenue heads.”

However, a breakdown showed that the underperformance was driven largely by poor royalty inflows from oil and gas. While the monthly budget projected ₦1.144 trillion from royalties, only ₦682.28 billion was realized in August, leaving a gap of ₦461.89 billion.

So far, NUPRC said it has transferred ₦5.475 trillion through the Central Bank of Nigeria to the Federation Account between January and August 2025, instead of ₦8.433 trillion expected from the sector.

It added: “The Commission’s performance from January to August 2025 is ₦7.103 trillion, inclusive of NNPC Limited JV and PSC royalty receivables of ₦1.050 trillion for the period, as well as Project Gazelle receipts of ₦730.24 billion for November 2024 (received in January 2025), and from January, March to June 2025.”

Despite the government’s production optimism, oil theft, pipeline vandalism, and lack of investment by oil companies have been blamed for the industry’s failure to meet government targets for the year.

Experts who spoke to Financial Vanguard were also pessimistic about the industry capacity to significantly improve production before the end of the year.

Engr. Joe Nwakwue, Partner at Zera Advisory, expressed doubt, stating: “It’s certainly a stretch. Most unlikely, we would achieve both volume and price targets going by current trends. However, there has been a significant uptick in non-oil revenue generation. I hope these improvements will address the shortfall in oil revenue.” Specifically on the 2.06 million barrels per day projection, Nwakwue said: “Volume growth takes time and resources, and resources take time to mobilize.”

On his part, Mr. Henry Adigun, CEO of AHA Consultancies, explained that while the country has the potential to produce two million barrels of oil per day, this was not possible in the short term. Adigun stated that the government makes the same mistake every year when making projections by placing a target that was unlikely to be achieved.

He criticized the projections, stating: “Every year they make false assumptions and projections that are unrealistic. This, at the end of the day, leads to poor budget performance because they don’t have the fundamentals correctly. What we expect them to use are figures that are realistic.”

He further added: “It has become normal for us to overestimate the barrels that we produce and then we have to borrow money to finance the budget. They rely on false projections that are unrealistic and that are not based on any facts and figures,” he stated.

But speaking on production targets at the weekend, the Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri, insisted that raising production to two million barrels per day was achievable before the end of the year.

Lokpobiri admitted that access to finance has hindered investment in the upstream sector, especially for Nigerian companies, but stated that this was being addressed at the continental level with the establishment of the $5 billion Africa Energy Bank to be hosted in Nigeria.

He highlighted the progress made on the bank, stating: “We have discovered that the biggest challenge we have in Africa is access to finance, and that is why we have come up with the African Energy Bank, which is ready to go. Nigeria, as the host country, has met its obligations.”

He further affirmed: “We have met all our obligations, legal, financial, and we are waiting for the bank to take off, which I think will take off, any moment from now.”

He said once that is done, “our target is to change the game so that we can mobilize local finances to invest in that bank, targeted at creating the best value that we can get for our own people.”

Also speaking on the issue, the Commission Chief Executive of NUPRC, Engr Gbenga Komolafe, said the national target is to reach 2.5 million barrels per day oil production. The Commission disclosed that this year alone, it has approved 38 field development plans that have attracted $19.43 billion investment.

Komolafe projected increased production, stating: “Since the inception of the Commission crude oil production has increased with current average daily production of 1.65mbopd expected to increase further with the Project 1 mbopd initiative which is aimed at achieving 2.5 Mbopd in 2027 compared to NUPRC commencement.”

To boost production, Nwakwue, a former chairman of the Society of Petroleum Engineers (SPE Nigeria), said “the government and the industry must collaborate to address issues and challenges around insecurity and sabotage, a more sustainable JV funding arrangement and demonstrate regulatory certainty.”

On his part, Prof. Wumi Iledare said while it may be difficult to attain the production target by the end of the year and in the process meet the government’s revenue target, oil production would rise in 2026 if the government does the right things.

Iledare stated that with indigenous producers opening up some of the abandoned fields and reservoirs, production would hit 1.8 million barrels before the end of the year.

He offered an optimistic medium-term outlook: “And with time, they will pick up as we continue to manage insecurity. I’m optimistic within the direction in which we are going. Not because of what an individual is doing, but because the PIA is implemented according to the intent of the law.”

He argued that the potential exists for much higher output: “You cannot have 37 billion barrels of oil and produce 1.4 million barrels per day. No, it’s too low. You are supposed to have the possibility of producing at least 3% of your 37 billion.”

He continued: “You are supposed to be able to produce three million barrels per day. When you say you have 37 billion, what it means in a technical term is that you are 90% certain, under current economic conditions and technology, to recover that in the lifetime of the reservoir and the field. So, the potential is there.”

Iledare concluded that governance remains the key challenge: “The biggest challenge is governance of the sector. If the governance of the sector, the empowering of the institutions is implemented according to the law, 3 million is not something Nigeria cannot achieve. Two million is optimistic in December,” he stated.