Nigeria’s Oil Revenue Falls Short by N16.2tn Despite Higher Production in 2025

Nigeria’s oil revenue fell sharply short of government projections in the first half of 2025, recording a N16.2tn deficit despite a slight increase in crude production, according to the Budget Office’s second quarter report. Between January and June, gross oil earnings stood at N9.32tn, far below the pro-rated target of N25.52tn, revealing the persistent fragility of the country’s oil-dependent fiscal system.

Data from the report indicated that average crude production rose marginally to 1.68 million barrels per day (mbpd), up from 1.6mbpd in the first quarter and 1.41mbpd in the same period of 2024. Yet, this was still below the budget benchmark of 2.12mbpd, limiting the revenue available for distribution to federal, state, and local governments. Despite missing the target, oil revenue grew N2.78tn, or 42.6 per cent, compared to the first half of 2024.

The shortfall reflects deep-rooted challenges in Nigeria’s oil sector, including theft, pipeline vandalism, underinvestment, and regulatory uncertainties. While non-oil revenues improved slightly due to inflationary pressures and increased economic activity, major streams such as crude oil and gas sales, petroleum profit taxes, and royalties all fell significantly below projections. Concessional rentals and miscellaneous revenues, however, outperformed expectations, showing some resilience in secondary oil income lines.

Crude oil remains Nigeria’s most critical source of foreign exchange and public revenue, accounting for 80–90 per cent of exports and over half of government earnings in most fiscal years. Fluctuating international prices, production volumes, and exchange rates leave the country highly vulnerable to external shocks, underlining the need for reforms and diversification beyond oil. The Petroleum Industry Act has introduced structural changes, but persistent production and security challenges continue to weigh on fiscal performance.

Finance Minister Wale Edun confirmed the wider revenue struggle, revealing that the government is expected to collect just N10.7tn in 2025, far below the projected N40.8tn. This gap threatens the implementation of the N54.9tn “budget of restoration,” aimed at stabilizing the economy and securing long-term prosperity. Analysts warn that sustained efforts to improve production efficiency, domestic refining, and regulatory clarity are critical to safeguarding Nigeria’s economic future.

source: punch