The Federal Government earned far less than expected from crude oil in the first half of 2025, even though crude oil production improved slightly during the period. According to the… The post Nigeria Misses Oil Revenue Target by Over 63% Despite Higher Crude appeared first on Radarr Africa.
The Federal Government earned far less than expected from crude oil in the first half of 2025, even though crude oil production improved slightly during the period. According to the second quarter Budget Performance Report released by the Budget Office of the Federation on Monday, the government recorded a gross oil revenue of N9.32 trillion between January and June 2025. This figure fell sharply below the pro-rated budget projection of N25.52 trillion for the same period.
The shortfall of N16.20 trillion represents a 63.49 per cent gap between projected and actual oil revenue, highlighting Nigeria’s continued fiscal challenges and heavy dependence on oil income. The report showed that while production levels improved compared with earlier periods, they still remained significantly below the benchmark set in the 2025 budget.
Data from the Budget Office indicated that Nigeria’s average crude oil production stood at 1.68 million barrels per day during the first half of the year. This was lower than the budget benchmark of 2.12 million barrels per day, which had been used to estimate oil revenue for 2025. The production gap had major implications for revenue inflows into the Federation Account.
Despite missing the target, the report showed a gradual improvement in output. Production increased by 0.08 million barrels per day from the 1.6 million barrels per day recorded in the first quarter of 2025. It also represented an increase of 0.27 million barrels per day compared with the 1.41 million barrels per day produced in the corresponding period of 2024.
In revenue terms, the half-year performance still showed an improvement compared with last year. The government earned N2.78 trillion more than what was recorded in the first half of 2024, representing a year-on-year increase of 42.59 per cent. According to the Budget Office, this improvement was driven mainly by higher crude output and better collection of petroleum profit tax and royalties, even though overall revenue fell short of expectations.
The report stated that “gross oil revenue amounting to N9.32 trillion was collected in the first half of 2025 as against N25.52 trillion pro-rate budget projection for the period. This denotes a decrease of N16.20 trillion, or 63.49 per cent, from the 2025 half-year budget estimate. It, however, reflects an increase of N2.78 trillion, or 42.59 per cent, from the actual half-year gross oil revenue performance reported in 2024.”
Crude oil remains Nigeria’s most important source of foreign exchange and public revenue. For more than 50 years, oil has accounted for between 80 and 90 per cent of export earnings and more than half of government revenue in most fiscal years. Oil earnings largely determine foreign exchange inflows, the value of the naira, and the amount of money shared monthly by the federal, state, and local governments through the Federation Account Allocation Committee.
However, the report emphasised that oil revenue is highly sensitive to international oil prices, production volumes, exchange rates, and fiscal terms. This makes government income vulnerable to global shocks, price volatility, and domestic production challenges.
A breakdown of the figures showed mixed results across different oil revenue lines. Concessional rentals rose sharply to N24.82 billion, exceeding the half-year projection of N2.06 billion by over 1,100 per cent. Miscellaneous oil revenue, including pipeline fees, also increased to N29.73 billion, beating its projection of N11.72 billion.
On the other hand, the main revenue streams performed poorly. Crude oil and gas sales generated only N712.57 billion, falling short of the N2.36 trillion target by nearly 70 per cent. Petroleum Profit Tax and Gas Tax yielded N4.16 trillion, missing the projected N15.69 trillion by over 73 per cent. Oil and gas royalties stood at N3.53 trillion, below the estimate of N6.86 trillion, while incidental oil revenue also came in lower than expected.
The report added that gas flaring penalties and exchange gains, which had no half-year projections, contributed N267.25 billion and N148.31 billion respectively.
In the second quarter alone, gross oil revenue stood at N4.77 trillion, representing a shortfall of N7.99 trillion from the quarterly projection. However, this was still higher than the N3.18 trillion recorded in the same quarter of 2024. Average crude oil price during the quarter was $74 per barrel, slightly below the $75 per barrel benchmark set in the 2025 budget.
The Budget Office noted that Nigeria’s oil sector continues to face deep challenges, including crude oil theft, pipeline vandalism, weak security, underinvestment, regulatory uncertainty, and limited domestic refining capacity. Environmental issues such as gas flaring and infrastructure gaps also continue to affect production and revenue performance, despite reforms introduced under the Petroleum Industry Act.
Last week, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, confirmed that the Federal Government recorded a major revenue shortfall in 2025. Speaking before the House of Representatives Committees on Finance and National Planning, he disclosed that while the government projected N40.8 trillion revenue for the year, it had generated only about N10.7 trillion so far. The revenue was meant to fund the N54.9 trillion 2025 budget, described as a “budget of restoration” aimed at stabilising the economy and laying the foundation for long-term growth.
The post Nigeria Misses Oil Revenue Target by Over 63% Despite Higher Crude appeared first on Radarr Africa.
