Nigeria’s gross profit from crude oil and gas operations declined by an estimated ₦824.66 billion in 2024 compared to the previous year.
According to the latest fiscal performance data from the Budget Office of the Federation, gross profit from the petroleum sector stood at ₦1.08 trillion in 2024, down from ₦1.90 trillion in 2023.
The result represents a 43 percent contraction, one of the steepest declines in recent years despite improved oil production.
The underperformance occurred against a government target of ₦1.46 trillion, signalling a shortfall of more than ₦380 billion and reinforcing continued weakness in upstream profitability.
Analysts attribute the decline to subdued global oil prices, lower realised output relative to budget assumptions, and persistent structural inefficiencies within Nigeria’s crude value chain.
Total oil and gas inflows before deductions reached ₦15.07 trillion in 2024, below the budget benchmark of ₦19.99 trillion. Although this represented an 80 percent year-on-year increase from 2023’s ₦8.36 trillion, most of the growth came from non-operational factors such as exchange-rate adjustments and stronger tax and royalty receipts rather than higher sales margins.
Industry data indicate that Nigeria’s average crude-oil production rose to about 1.43 million barrels per day in 2024, up from 1.27 million barrels the previous year.
However, output remained well below the fiscal projection of 1.78 million barrels per day, limiting gross profit potential.
Despite the increase in production, realised prices and operational efficiency failed to match expectations, underscoring the impact of under-investment and lingering security challenges in oil-producing corridors.
While direct profits fell, other components of oil revenue improved. Collections from royalties and petroleum profit tax strengthened significantly due to better compliance monitoring and reforms under the Petroleum Industry Act.
Exchange-rate liberalisation also inflated naira-denominated revenues, even though it did not translate into stronger cash performance in foreign currency terms.
Fiscal analysts note that Nigeria’s oil-sector earnings are becoming increasingly dependent on non-core revenue sources such as taxes, penalties, and valuation effects.
The shift, though supportive in the short term, raises sustainability questions as the country works toward rebuilding production capacity and improving the operational performance of its national oil assets.
Overall, the decline in gross profit highlights a structural mismatch between production recovery and profitability.
Despite recording higher output volumes, Nigeria’s upstream sector continues to face headwinds from infrastructure constraints, deferred maintenance, and fluctuating international prices.
Policymakers and operators are expected to focus on cost reduction, production stability, and capital reinvestment to restore margin growth in 2025.