The Central Bank of Nigeria has attributed the significant decline in oil revenue for the third quarter of 2024 to ageing pipeline infrastructure and operational inefficiencies.
According to the apex bank’s latest economic report for the third quarter of 2024, oil revenue fell by 24.72 per cent to N1.30tn compared to the second quarter of 2024.
This drop was largely due to lower receipts from petroleum profit tax and royalties.
Also, the revenue figure fell short of the quarterly target by 75.39 per cent, primarily due to frequent shut-ins caused by deteriorating pipelines and installations.
The report read, “Oil revenue, however, fell by 24.72 per cent to N1.30tn, relative to the level in Q2 2024 on account of lower receipts from petroleum profit tax and royalties.
“It was also 75.39 per cent short of the quarterly target due to shut-ins, arising from ageing oil pipelines and installations.”
It also noted that despite a modest increase in crude oil production to 1.33 million barrels per day from 1.27 mbpd in the preceding quarter, challenges including theft, vandalism, and infrastructure deficits severely hampered Nigeria’s oil revenue performance.
The ageing infrastructure not only reduced efficiency but also undermined the country’s ability to meet its OPEC production quota.
The report noted that global factors further compounded the situation, as the average spot price of Nigeria’s Bonny Light crude fell by 5.45 per cent to $82.23 per barrel during the quarter, reflecting subdued demand in the global market.
Similar declines were observed in other crude benchmarks, including Brent and the OPEC Reference Basket.
While the oil sector struggled, the Nigerian economy recorded growth of 3.46 per cent in Q3 2024, up from 3.19 per cent in the second quarter, driven largely by the non-oil sector, which contributed 3.18 percentage points to total GDP growth.
The oil sector’s growth slowed to 5.17 per cent year-on-year, compared to 10.15 per cent in the previous quarter, as operational inefficiencies and declining crude oil prices took a toll.
The fiscal implications were significant, with federally collected revenue falling 23.71 per cent short of the budget benchmark, despite a 7.48 per cent quarter-on-quarter increase.
The fiscal deficit, although narrowing by 22.51 per cent compared to the previous quarter, widened by 43.88 per cent relative to the quarterly target, reflecting ongoing fiscal pressures.
The report concluded that Nigeria’s goal of achieving an oil production target of 2mbpd by the end of 2024 remains under threat due to these challenges.