The Federal Government aims to generate N7.69 trillion in oil revenue, constituting a substantial portion of the N27.5 trillion budget for 2024.
This proposed oil revenue is more than three times the 2023 budget allocation of approximately N2.23 trillion, highlighting a strategic shift.
Despite challenges like oil theft and infrastructural deficits affecting the sector, the government plans to triple its revenue, aiming for 41.98% of the total 2024 revenue.
However, concerns arise as the government foresees a decline in oil revenue in 2025 (N6.83 trillion) and 2026 (N7.08 trillion).
The persistent shortfall in oil revenue targets is evident, with Nigeria’s oil sector grappling with issues such as pipeline vandalism, illegal oil bunkering, and theft.
The newly inaugurated Special Ad Hoc Committee on oil theft underscores the severity of these challenges, estimating losses of over 300,000 barrels of crude oil daily and N1.29 trillion annually.
The historical performance reveals the government’s struggle to meet its oil revenue targets, achieving only 35.4% in 2022 and approximately 79.3% in 2023 (January to September).
The presented figures indicate a significant gap between projected and realized revenues.
While the oil sector experienced a negative growth rate of -0.85% in Q3/2023, it marks an improvement compared to Q3/2022 (-22.67%) and Q2/2023 (-13.43%).
This positive trend is attributed to the administration’s efforts in enhancing living conditions in the Niger Delta, engaging oil operators, and fostering an investment-friendly environment.
The government sets a conservative oil price benchmark of $77.96 per barrel with a daily production estimate of 1.78mb/d for 2024.
However, concerns arise regarding the feasibility of achieving the proposed revenue, given OPEC and its allies’ commitment to crude oil production cuts, as highlighted in a report by S&P Global Commodity Insights.
Clementine Wallop, a senior adviser, suggests that Nigeria’s oil sector faces challenges, emphasizing the ongoing work required by the administration of Bola Tinubu.
Despite these hurdles, the government remains optimistic, basing its forecasts on approved work plans and anticipating improved security situations and the commencement of key gas projects.
