In what may be described as a startling twist for Africa’s top oil-producer, the country’s government reported a substantial drop in earnings from crude oil and gas sales in 2024. According to the latest fiscal data, gross profit dropped to ₦1.08 trillion in 2024 from ₦1.90 trillion in 2023, representing a staggering 43.3% decline.
This underperformance came even though the total oil-and-gas revenue before deductions nearly doubled year-on-year, rising from ₦8.36 trillion in 2023 to ₦15.07 trillion in 2024. Paradoxically, while revenue increased, the slice that remains after costs and other deductions shrank sharply. For context, that gross profit now amounts to only around 7.2% of total oil and gas receipts, a steep fall from about 22.8% in 2023.
Put another way, despite improved nominal inflows, the operating margin from crude & gas fell dramatically. The gap between performance and expectation also loomed large; the target for full-year gross profit was ₦1.46 trillion, meaning the result fell short by around ₦385.39 billion (or 26.3%). Quarterly figures exposed the pressure further: profits slid through the year with Q2 particularly weak, and none of the quarterly results hit the implied budget benchmark of roughly ₦366.09 billion.
Digging deeper into the dynamics, the surge in oil-and-gas revenue was largely fuelled not by stronger margins in production and sale of crude oil, but by a mixture of higher royalties, increased gas income, exchange-rate gains stemming from naira depreciation, and elevated penalties and miscellaneous upstream revenue. At the same time, the underlying production and margin performance struggled: average daily output hovered between 1.4 to 1.6 million barrels per day, well below the budget’s 1.78 million bpd benchmark.
The profit collapse underscores a broader fiscal risk: even as headline oil revenue rises, the erosion in profit margins limits the government’s ability to fund budget commitments. Nigeria remains heavily reliant on oil income; weaker margins mean less realisable revenue to support public investment, exacerbating vulnerability in an economy seeking diversification.
