Nigeria’s gross profit from crude oil and gas sales fell by N824.66 billion in 2024, even as overall oil receipts and production showed an uptrend.
Fresh data from the Budget Implementation Report for Q4 2024, published by the Budget Office of the Federation, show that gross profit dropped to N1.08 trillion in 2024 from N1.90 trillion in 2023. That represents a 43.32% year-on-year decline.
The N1.08 trillion outturn also missed the Federal Government’s full-year target of N1.46 trillion by N385.39 billion, or 26.32%, signalling a much weaker-than-planned profitability from crude sales despite reforms such as petrol subsidy removal and tighter upstream monitoring.
Gross oil earnings account for only 7.2% of total oil revenue
More striking is how small gross profit has become relative to total oil receipts. Sub-total oil and gas revenue before deductions stood at N15.07 trillion in 2024, up from N8.36 trillion in 2023.
This means gross profit accounted for only about 7.2% of total oil and gas revenue in 2024 (N1.08 trillion out of N15.07 trillion), compared with roughly 22.8% in 2023 (N1.90 trillion out of N8.36 trillion). In other words, while the government is mobilising more naira revenue from the sector, far less of that is showing up as pure profit.
Quarterly patterns reinforce the pressure on margins. Actual gross profit came in at N365.22 billion in Q1 2024, slumped to N161.49 billion in Q2, recovered modestly to N216.58 billion in Q3 and then rose to N335.69 billion in Q4. None of the quarters, however, was able to meet the implied quarterly budget benchmark of N366.09 billion.
The collapse in the Q2 numbers, in particular, created a hole that the subsequent quarters could not fill, leaving full-year profit well below target.
Oil taxes, royalties and FX gains soar
Beneath the weak gross profit line, the rest of the oil and gas revenue table looks far more buoyant. Total oil and gas revenue before deductions jumped to N15.07 trillion in 2024 from N8.36 trillion in 2023, an increase of about 80.33%.
This is still below the N19.99 trillion budget by N4.93 trillion or 24.65%, but it shows that the fiscal system is collecting much more naira revenue from the upstream sector than a year earlier.
Petroleum Profit Tax (PPT) and gas income more than doubled, rising to N6.00 trillion in 2024 from N2.84 trillion in 2023. The increase of N3.17 trillion translates to 111.56% growth, although the outcome still underperformed the ambitious N11.98 trillion budget by N5.98 trillion, or about 49.89%. Oil and gas royalties also surged.
They reached N6.99 trillion in 2024 compared with N2.50 trillion in 2023, a jump of N4.49 trillion or 179.74%. This reflects a combination of higher average production, improved metering and compliance, and stricter enforcement by regulators such as the Nigerian Upstream Petroleum Regulatory Commission.
Exchange gain was another major driver. With the naira sharply weaker after FX reforms, the naira value of dollar-denominated oil exports rose dramatically. Exchange gains climbed to N4.24 trillion in 2024 from N791.88 billion in 2023, an increase of N3.45 trillion or 435.93%.
Other ancillary revenue lines also improved. Gas flaring penalties stood at N391.26 billion in 2024 compared with N140.54 billion in 2023, up 178.40%. Incidental oil revenue from royalty recovery and marginal fields more than doubled to N347.75 billion from N155.99 billion, while concessional rentals and pipeline-related miscellaneous revenues also posted triple-digit percentage growth.
Yet, despite this broad-based expansion in tax, royalty and FX-related inflows, the gross profit line moved in the opposite direction. The data strongly suggest that higher revenue mobilisation is being offset by elevated operating costs, legacy obligations and the structure of production-sharing and joint-venture agreements, leaving the government with a shrinking slice of the sector’s underlying profitability.
New oil revenue hits N12.95 trillion
Total deductions — covering items such as joint-venture cash calls, cost of collection and federally funded upstream projects — dropped sharply from N2.45 trillion in 2023 to N156.70 billion in 2024.
The line for “Other Federally Funded Upstream Projects” alone moved from N1.92 trillion in 2023 to zero in 2024, while fiscal deductions under JV cash calls were reported at N527.42 billion in 2023 and nil in 2024.
As a result, net oil revenue to the federation rose aggressively. Net oil revenue (which is the same as “To Federation Account (Oil)” in the report) climbed to N12.95 trillion in 2024 from N4.82 trillion in 2023, an increase of N8.13 trillion or 168.83%.
Total oil and gas revenue after the 13% derivation to oil-producing states also rose from N7.27 trillion in 2023 to N13.11 trillion in 2024, up by N5.84 trillion or 80.35%. These headline numbers partly explain why FAAC oil allocations have looked stronger in nominal terms through 2024.
Much of the improvement in net oil revenue is being driven by FX valuation gains and the way deductions are booked, rather than by underlying efficiency or cost competitiveness in the upstream sector.
