Nigeria’s earnings from crude oil and gas sales plunged by 43% in 2024, even as production increased, highlighting persistent fiscal challenges for Africa’s largest oil producer. According to the fourth-quarter Budget Implementation Report released by the Budget Office of the Federation, gross profit from oil and gas sales fell from N1.90 trillion in 2023 to N1.08 trillion, missing the government’s target of N1.46 trillion by more than a quarter.
Despite total oil and gas revenue rising to N15.07 trillion—up 80% from N8.36 trillion in 2023 due to higher royalties, taxes, and exchange-rate gains—the figures still fell short of the N19.99 trillion projected. Officials cited lower-than-expected global oil prices and production levels, which fluctuated between 1.4 million and 1.6 million barrels per day, below the budget benchmark of 1.78 million barrels per day.
Revenue from oil sales accounted for just 8% of total oil and gas income, signaling a shift toward taxes and royalties as the dominant contributors. Petroleum Profit Tax and Company Income Tax combined generated N6 trillion, while royalties climbed to N6.99 trillion—nearly triple the previous year—thanks to improved compliance under the Petroleum Industry Act. Gas-flaring penalties and incidental revenue from marginal-field settlements also saw significant increases.
Although crude-oil production improved to 442.21 million barrels in 2024, a 12.6% rise from 2023, it still met only 80% of the government’s target. Analysts attribute the shortfall to infrastructure constraints, underinvestment, and crude theft. Production recovered toward the year’s end, with daily output peaking at 1.49 million barrels per day in December, but the gains were not enough to offset weak earnings from oil sales.
The report also intensifies scrutiny on the Nigerian National Petroleum Company Limited (NNPC) over remittances. Investigations by the Federation Account Allocation Committee and the Nigeria Governors’ Forum allege under-remittance of revenues, with NNPC yet to remit interim dividends into the Federation Account in 2025. These discrepancies, coupled with falling global demand, especially from key buyers like India, cast further uncertainty over Nigeria’s oil-dependent fiscal outlook.
source: Business day