Nigeria’s oil and gas revenue in 2024 fell significantly short of its budget target, showing a decline of 24.7 per cent against projected figures.
The gross oil revenue for 2024 before deductions was $15.07 trillion against the $19.99 trillion budget target (a N4.93 trillion shortfall).
This is according to data from the latest Budget Implementation Report for the fourth quarter of 2024 released by the Budget Office of the Federation.
This shortfall was attributed to a decline in oil production and lifting caused by issues like low sector investment, crude oil theft, and high fiscal deductions.
The report, however, revealed that despite the drop, the 2024 revenue was still significantly higher (80.5 per cent) than the $8.35 trillion earned in 2023. The year-on-year increase was said to have been driven largely by higher royalties, penalties and exchange-rate gains following the naira’s depreciation, rather than from higher crude export volumes.
The gross profit dropped by N824.66 billion, or 43.2 per cent, from N1.90 trillion in 2023 to N1.08 trillion during the year. When compared with the actual target of N1.46 trillion, it revealed a 26.3 per cent shortfall.
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The quarterly trend revealed that oil receipts increased from N3.35 trillion in the first quarter to N3.91 trillion in the fourth quarter but remained persistently below the predicted quarterly average of N4.99 trillion.
Nigeria’s petroleum output ranged between 1.4 and 1.6 million barrels per day, falling short of the 1.78 million barrels per day objective set in the 2024 budget.
Despite being the country’s major fiscal foundation in the past, gross profit from crude oil and gas sales represented just around 8 per cent of total oil and gas revenue in 2024, showing the structural shift in government earnings toward taxes, royalties, and penalties.
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The government’s budget assumptions for oil prices were higher than the actual average price realised in the market, contributing to the revenue gap.
The revenue from the direct sale of crude oil and gas, along with petroleum profit tax, performed poorly. Crude oil and gas sales and petroleum profit and gas taxes both fell significantly below their quarterly targets in Q4 2024.
Shifting Revenue Sources
The Petroleum Profit Tax and Company Income Tax on gas activities raked in N6.00 trillion, accounting for approximately 40% of total oil inflows, while oil and gas royalties alone produced N6.99 trillion, a 179.74% rise from N2.50 trillion in 2023.
Other revenue streams also fared well, with gas-flaring fines totalling N391.26 billion, up 178 per cent from N140.54 billion in 2023, despite the fact that the budget contained no allocation for this category.
Incidental oil revenue from royalty collection and marginal field settlements jumped to N347.75 billion from N155.99 billion from the previous year, a 122.93 per cent rise, while miscellaneous income, primarily from pipeline fees, increased to N35.2 billion from N16.38 billion.
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One of the most significant factors in the apparent expansion in oil revenue was the exchange-rate gain, which surged to N4.24 trillion in 2024 from N791.88 billion in 2023—an increase of nearly 435 per cent.
The spike coincided with the naira’s sharp depreciation following exchange rate liberalisation, which inflated dollar-denominated oil earnings when converted into local currency.
After accounting for all deductions, net oil revenue for 2024 was N12.95 trillion, compared to a budget target of N16.98 trillion, a difference of N4.03 trillion, or 23.74 per cent. When compared to the N4.82 trillion achieved in 2023, the 2024 result shows a 168.83 per cent gain.
Pinnacle DAILY reports that the revenue from Petroleum Profit Tax, Company Income Tax, and royalties, which saw a major increase, nearly tripling from the previous year, was partly due to improved compliance and reforms under the Petroleum Industry Act (PIA).
The data highlights Nigeria’s ongoing struggle with domestic oil production challenges and a structural shift in its revenue streams away from direct sales toward taxes and royalties
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in mass communication.
