Nigeria’s crude oil profit fell by N824bn in 2024

Nigeria’s gross profit from crude oil and gas sales fell sharply by N824.66 billion in 2024, even as total oil revenue and production rose, according to the Budget Implementation Report for Q4 2024 published by the Budget Office of the Federation.

The report shows gross profit declined to N1.08 trillion in 2024 from N1.90 trillion in 2023, marking a 43.3% year-on-year drop.

The outcome also missed the government’s full-year target of N1.46 trillion by N385.39 billion, highlighting weaker-than-expected profitability despite reforms such as fuel subsidy removal and tighter upstream monitoring.

While gross profit accounted for just 7.2% of total oil and gas revenue (N1.08 trillion out of N15.07 trillion) in 2024, it was 22.8% in 2023.

Quarterly data reveal that Q2 2024 suffered the most, with gross profit plunging to N161.49 billion, while other quarters failed to meet the implied quarterly benchmark of N366.09 billion.

Despite the slump in profits, total oil and gas revenue before deductions jumped 80.3% to N15.07 trillion, driven by strong gains in Petroleum Profit Tax, royalties, and exchange rate valuation.

PPT and gas income rose to N6 trillion, up 111.6% from 2023, while oil royalties surged 179.7% to N6.99 trillion.

Exchange gains from naira depreciation added N4.24 trillion, a 435.9% increase.

Other revenue streams also improved sharply, including gas flaring penalties (N391.26 billion) and incidental oil revenues (N347.75 billion).

The disconnect between revenue growth and gross profit reflects higher operating costs, legacy obligations, and the structure of production-sharing agreements, which have eroded underlying profitability.

Meanwhile, total deductions for items such as joint-venture cash calls and federally funded upstream projects dropped from N2.45 trillion in 2023 to N156.7 billion in 2024, boosting net oil revenue to the federation to N12.95 trillion, up 168.8% year-on-year.

Total revenue after the 13% derivation to oil-producing states rose 80.3% to N13.11 trillion, partly explaining stronger FAAC allocations in nominal terms.

The report suggests that while Nigeria is mobilising more revenue in naira terms, gross profitability from crude sales is shrinking, highlighting the need for better cost management and efficiency in the upstream sector.