The Central Bank of Nigeria (CBN), identified ageing pipeline infrastructure and operational inefficiencies as major factors behind the sharp decline in oil revenue for the third quarter of 2024.
In its latest economic report, the CBN revealed that oil revenue dropped by 24.72% to ₦1.30 trillion, compared to the second quarter of 2024.
This figure also fell 75.39% short of the quarterly target due to frequent shutdowns caused by deteriorating pipelines and installations.
The report stated, “Oil revenue, however, fell by 24.72% to ₦1.30 trillion, relative to the level in Q2 2024, on account of lower receipts from petroleum profit tax and royalties.
It was also 75.39% short of the quarterly target due to shut-ins, arising from ageing oil pipelines and installations.”
Despite a modest increase in crude oil production to 1.33 million barrels per day (mbpd) from 1.27 mbpd in the preceding quarter, persistent issues such as theft, vandalism, and infrastructure deficits hindered Nigeria’s ability to meet its OPEC production quota.
Compounding these challenges, the global average spot price of Nigeria’s Bonny Light crude fell by 5.45% to $82.23 per barrel during the quarter, reflecting subdued global demand.
Other crude oil benchmarks, including Brent and the OPEC Reference Basket, experienced similar declines.
Meanwhile, Nigeria’s overall economy recorded a 3.46% growth in Q3 2024, up from 3.19% in the previous quarter, primarily driven by the non-oil sector, which contributed 3.18 percentage points to total GDP growth.
However, oil sector growth slowed significantly to 5.17% year-on-year from 10.15% in the previous quarter.
The fiscal implications were stark, with federally collected revenue falling 23.71% short of the budget benchmark, despite a 7.48% quarter-on-quarter increase.
The fiscal deficit narrowed by 22.51% compared to the prior quarter but widened by 43.88% relative to the quarterly target.
The CBN concluded that Nigeria’s goal of achieving an oil production target of 2 mbpd by the end of 2024 faces significant threats from these ongoing challenges.
