Nigeria’s earnings from crude oil sales slumped by N824.66 billion in 2024, falling to N1.08 trillion from N1.90 trillion in 2023, according to the Budget Implementation Report for Q4 2024 published by the Budget Office of the Federation.
This represents a sharp 43.32% year-on-year decline and a miss of the Federal Government’s full-year target of N1.46 trillion by N385.39 billion, or 26.32%.
The decline underscores weak profitability in crude sales, even amid reforms such as petrol subsidy removal and tighter upstream monitoring. Gross profit now accounts for only 7.2% of total oil receipts, a steep drop from 22.8% in 2023. Total oil and gas revenue before deductions surged to N15.07 trillion from N8.36 trillion, highlighting that higher revenue mobilisation is not translating into proportional profits.
Quarterly Performance Shows Margin Pressure
Quarterly gross profit patterns reflect persistent margin pressure. Q1 recorded N365.22 billion, Q2 slumped to N161.49 billion, Q3 rose to N216.58 billion, and Q4 reached N335.69 billion. None of the quarters met the implied quarterly budget benchmark of N366.09 billion. The Q2 collapse created a gap that subsequent quarters could not recover, leaving full-year profit well below the target.
Oil Taxes, Royalties, and FX Gains Surge
Despite declining gross profit, other revenue lines expanded strongly. Petroleum Profit Tax (PPT) and gas income more than doubled to N6.00 trillion from N2.84 trillion, a 111.56% rise, though still below the N11.98 trillion budget. Oil and gas royalties climbed 179.74% to N6.99 trillion, driven by higher production, improved metering, compliance, and stricter enforcement by the Nigerian Upstream Petroleum Regulatory Commission.
Foreign exchange gains also soared as the naira weakened, with FX-related income jumping to N4.24 trillion from N791.88 billion, a 435.93% increase. Gas flaring penalties rose to N391.26 billion from N140.54 billion, and incidental revenues from royalties and marginal fields more than doubled to N347.75 billion.
Deductions Fall, Net Revenue Surges
Total deductions, including joint-venture cash calls and federally funded upstream projects, dropped sharply from N2.45 trillion in 2023 to N156.70 billion in 2024. The “Other Federally Funded Upstream Projects” line fell to zero, while JV cash calls were recorded as nil. Consequently, net oil revenue to the federation rose to N12.95 trillion from N4.82 trillion, an increase of 168.83%. Total oil and gas revenue after the 13% derivation to oil-producing states also jumped to N13.11 trillion, up 80.35%.
Profitability Challenges Remain
The report signals a crucial insight: while Nigeria is mobilising more naira revenue from oil through taxes, royalties, and FX gains, operating costs, legacy obligations, and joint-venture arrangements are eroding gross profitability. Higher revenue is offset by elevated costs, leaving the government with a shrinking slice of the sector’s core profit.
In essence, Nigeria’s oil sector in 2024 illustrates a paradox: record revenue mobilisation does not automatically translate to higher profitability, highlighting the urgent need for structural reforms in cost management and upstream efficiency.
