The Central Bank of Nigeria (CBN) has attributed the significant decline in the country’s oil revenue for the third quarter of 2024 to deteriorating pipeline infrastructure and ongoing operational inefficiencies. According to the apex bank’s latest economic report, oil revenue plummeted by 24.72 percent, totaling N1.30 trillion, compared to the previous quarter.
The report highlights that the decline was primarily due to lower receipts from petroleum profit tax and royalties. Furthermore, the revenue figure fell short of the quarterly target by a substantial 75.39 percent, largely due to frequent shutdowns caused by aging pipelines and installations.
“The decline in oil revenue was a result of a 24.72 percent decrease to N1.30 trillion, driven by lower receipts from petroleum profit tax and royalties,” the report stated. “It was also 75.39 percent below the quarterly target, mainly due to shut-ins caused by the deteriorating oil pipelines and installations.”
Despite a modest increase in crude oil production, from 1.27 million barrels per day (mbpd) in Q2 2024 to 1.33 mbpd in Q3, the sector’s performance was severely hindered by challenges such as theft, vandalism, and infrastructural deficits. The aging infrastructure not only reduced operational efficiency but also compromised Nigeria’s ability to meet its OPEC production quota.
The report further noted that global market factors added to the strain, with the average spot price of Nigeria’s Bonny Light crude falling by 5.45 percent to $82.23 per barrel. This decline reflected subdued global demand, a trend also seen in other major crude benchmarks, including Brent and the OPEC Reference Basket.
While the oil sector faced significant setbacks, the Nigerian economy recorded a growth rate of 3.46 percent in Q3 2024, up from 3.19 percent in the previous quarter. This growth was largely driven by the non-oil sector, which contributed 3.18 percentage points to the overall GDP growth.
The oil sector’s growth slowed to 5.17 percent year-on-year, down from 10.15 percent in Q2, as operational challenges and declining crude oil prices took a toll on the industry’s performance.
The fiscal implications were also notable, with federally collected revenue falling 23.71 percent short of the budget benchmark. However, there was a 7.48 percent quarter-on-quarter increase in revenue. Despite a narrowing fiscal deficit of 22.51 percent compared to the previous quarter, it widened by 43.88 percent relative to the quarterly target, indicating ongoing fiscal pressures.
The report concluded by highlighting that Nigeria’s target of achieving oil production of 2 mbpd by the end of 2024 remains under significant threat due to the combination of operational inefficiencies, infrastructure challenges, and external market factors.
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