Nigeria has experienced a crude oil production shortfall of approximately 93.74 million barrels during the first eight months of 2025, heightening concerns about the government’s ability to adequately fund the 2025 national budget.
The production deficit translates to a potential revenue shortfall of around $6.848 billion, a key component of the country’s budgetary financing. Based on data from the Central Bank of Nigeria (CBN), Nigeria’s bonny light crude oil price averaged $73.06 per barrel over this period. However, when calculated against the 2025 budget benchmark of $75 per barrel, the revenue shortfall rises to approximately $7.03 billion.
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that total crude oil and condensate output from January to August reached 406.84 million barrels, reflecting an 18.27 percent deficit compared to the projected 500.58 million barrels for the same period. The 2025 budget had assumed a daily crude oil production target of 2.06 million barrels, but actual output averaged only 1.673 million barrels per day, representing an average daily shortfall of 390,000 barrels.
If the current production trend persists over the remaining four months, Nigeria could lose an additional 47.58 million barrels over 122 days, translating to about $3.56 billion in revenue.
A quarterly breakdown revealed significant gaps: in the first quarter (Q1 2025), the country missed its production target by 35.01 million barrels, equivalent to $2.625 billion in lost revenue. Early data for the third quarter indicates a continued trend, with July showing a shortfall of 10.78 million barrels ($808.5 million) and August 13.28 million barrels ($996 million).
The NUPRC’s report to the September Federation Account Allocation Committee (FAAC) highlighted a revenue shortfall of N459.6 billion in August, against a budget target of N1.2 trillion, following a remittance of only N745 billion. In July, remittances totaled N723.168 billion. The two-month combined shortfall from the oil and gas sector amounted to N941.229 billion.
Although total revenue collection increased by N22.04 billion (3.05 percent) in August compared to July, largely due to a revenue drive that boosted performance across several revenue heads, underperformance was primarily attributed to lower royalty inflows. While the budget projected N1.144 trillion in royalties for August, only N682.28 billion was collected, leaving a gap of N461.89 billion.
From January to August 2025, the NUPRC transferred N5.475 trillion to the Federation Account via the CBN, falling short of the N8.433 trillion expected from the sector. Including NNPC Limited JV and PSC royalty receivables of N1.05 trillion, along with Project Gazelle receipts of N730.24 billion from November 2024 (received in January 2025) and other monthly transfers, the commission’s total performance for the period reached N7.103 trillion.
Factors Behind Underperformance
Experts attribute the shortfall to oil theft, pipeline vandalism, and limited investment by oil companies. Engr. Joe Nwakwue, Partner at Zera Advisory, expressed skepticism that the government could meet both production and price targets given current trends, although he noted improvements in non-oil revenue generation might help mitigate the shortfall.
Mr. Henry Adigun, CEO of AHA Consultancies, criticized the government for setting unrealistic annual projections, arguing that overestimated production targets often lead to poor budget performance and reliance on borrowing to fill funding gaps.
Despite these challenges, Minister of State Petroleum Resources (Oil), Senator Heineken Lokpobiri, maintained that raising production to 2 million barrels per day is achievable before year-end. He cited access to finance as a key constraint for Nigerian companies and highlighted the upcoming $5 billion Africa Energy Bank, which is expected to mobilize local investment in the energy sector.
NUPRC CEO, Engr. Gbenga Komolafe, reiterated that the national goal is to reach 2.5 million barrels per day, noting that the commission has approved 38 field development plans in 2025 attracting $19.43 billion in investment. Current average daily production stands at 1.65 million barrels per day, with expectations of further increases through the Project 1 mbopd initiative aimed at achieving 2.5 million barrels per day by 2027.
Pathways to Boost Production
Experts recommend enhanced collaboration between government and industry to address security challenges, implement sustainable joint venture funding, and ensure regulatory certainty. Prof. Wumi Iledare projected that indigenous producers tapping abandoned fields could raise production to 1.8 million barrels per day before year-end, with potential for further growth if insecurity is managed and the Petroleum Industry Act (PIA) is fully implemented.
Iledare emphasized that Nigeria’s oil reserves could support up to three million barrels per day under current economic and technological conditions, but governance and institutional empowerment remain key to unlocking this potential.
