Nigeria has suffered a crude oil production shortfall of about 93.74 million barrels between January and August 2025, raising serious concerns over the federal government’s ability to fund the 2025 national budget.
Reports indicate that the deficit translates to roughly $6.85 billion in lost oil revenue — or about $7.03 billion when compared to the government’s $75 per barrel benchmark. Crude oil remains Nigeria’s main source of foreign exchange and fiscal revenue.
Data from the Central Bank of Nigeria (CBN) showed that Bonny Light crude averaged $73.06 per barrel during the period. However, figures from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed total crude and condensate production of 406.84 million barrels, falling short of the 500.58 million barrels projected — an 18.27% deficit.
The 2025 federal budget was predicated on a daily crude output of 2.06 million barrels per day (bpd), but actual production averaged 1.673 million bpd, resulting in a daily shortfall of approximately 390,000 barrels.
If this trend continues through December, the nation risks losing an additional 47.58 million barrels, translating to another $3.56 billion in lost revenue.
Billions Lost Across Q1–Q3 2025
A breakdown of NUPRC data shows that Nigeria missed its production target by 35.01 million barrels in Q1 2025, valued at $2.63 billion.
In Q2, another 34.67 million barrels were lost, worth approximately $2.59 billion. The shortfall worsened in Q3 — July alone saw a deficit of 10.78 million barrels ($808.5 million), while August recorded another 13.28 million barrels ($996 million).
This brings the total shortfall to 93.74 million barrels in just eight months.
Revenue Deficit Deepens
In its August 2025 report to the Federation Account Allocation Committee (FAAC), the NUPRC disclosed a ₦459.6 billion revenue shortfall against its ₦1.2 trillion monthly target, after remitting ₦745 billion.
In July, remittance stood at ₦723.17 billion, leaving a combined ₦941.23 billion gap over the two-month period.
Despite a modest ₦22.04 billion increase (3.05%) in August collections, the Commission said the performance remained below expectation due to weak royalty inflows. Out of the ₦1.144 trillion royalty target, only ₦682.28 billion was realised, leaving a ₦461.89 billion deficit.
Between January and August 2025, the Commission transferred ₦5.475 trillion to the Federation Account, significantly below the ₦8.433 trillion projected from the sector.
NUPRC’s Performance Overview
The NUPRC reported a cumulative performance of ₦7.103 trillion from January to August 2025, including:
- ₦1.050 trillion in NNPC Joint Venture (JV) and Production Sharing Contract (PSC) royalty receivables,
- ₦730.24 billion in Project Gazelle receipts (for November 2024, received in January 2025), and
- Other inflows recorded between January and June 2025.
Industry Experts Warn of Looming Fiscal Risks
Analysts say persistent oil theft, pipeline vandalism, and weak upstream investment continue to cripple Nigeria’s oil sector, threatening the government’s 2025 fiscal targets.
In an interview with Vanguard, Engr. Joe Nwakwue, Partner at Zera Advisory, described the government’s oil revenue projections as “overly optimistic.”
“It’s certainly a stretch. It’s unlikely we’ll achieve both production and price targets based on current trends,” Nwakwue said. “However, the rise in non-oil revenue may help cushion the shortfall.”
He added that “volume growth takes time and resources, and resources take time to mobilize.”
Similarly, Henry Adigun, CEO of AHA Consultancies, criticised the government’s oil assumptions as “unrealistic and repetitive mistakes.”
“Every year they make false assumptions that lead to poor budget performance,” Adigun stated. “Overestimating oil output forces the government to borrow unnecessarily to finance deficits.”
He concluded that Nigeria must align its projections with realistic capacity to avoid further fiscal instability.
Government Retains Confidence in Meeting Oil Targets Despite Setbacks
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, has reaffirmed the federal government’s commitment to achieving its 2 million barrels per day oil production target before the end of 2025.
Lokpobiri acknowledged that limited access to financing remains a major challenge for Nigerian upstream operators but revealed that efforts are ongoing to address the issue through the establishment of the $5 billion Africa Energy Bank, which will be headquartered in Nigeria.
“We have discovered that the biggest challenge we have in Africa is access to finance, and that is why we have come up with the African Energy Bank, which is ready to go,” Lokpobiri said.
According to him, Nigeria has already fulfilled all its legal and financial obligations as the host nation, and the bank is expected to commence operations soon. Once launched, the institution will mobilize local capital to drive investments in the continent’s energy sector and “change the game” for African oil producers.
NUPRC Targets 2.5 Million Barrels Daily by 2027
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, stated that Nigeria’s long-term production goal is to reach 2.5 million barrels per day by 2027.
He noted that crude oil output has shown gradual improvement since the commission’s establishment, with current production averaging 1.65 million barrels per day.
“This is expected to rise further under the Project 1 Million Barrels Per Day (1mbpd) initiative, which aims to boost national production to 2.5 million barrels daily by 2027,” Komolafe explained.
He also revealed that the commission approved 38 Field Development Plans (FDPs) in 2025, attracting an estimated $19.43 billion in new upstream investments.
Experts Call for Security, Regulatory Reforms
Industry analysts emphasize that Nigeria’s oil production growth hinges on addressing insecurity, pipeline sabotage, and policy instability.
Former Chairman of the Society of Petroleum Engineers (SPE Nigeria), Engr. Joe Nwakwue, urged the government to enhance collaboration with industry players to resolve security challenges, ensure consistent joint venture funding, and maintain regulatory stability.
Energy economist Prof. Wumi Iledare expressed cautious optimism, stating that with continued implementation of the Petroleum Industry Act (PIA) and sustained sector reforms, production could reach 1.8 million barrels per day before year-end.
“You cannot have 37 billion barrels of reserves and produce only 1.4 million barrels daily—that’s too low,” Iledare said. “A country with that reserve base should produce at least three million barrels per day.”
He stressed that strengthening sector governance and empowering regulatory institutions are essential to unlocking Nigeria’s full oil potential.
Budget Implications
Despite government optimism, analysts warn that persistent underperformance in the oil sector could strain the ₦28.7 trillion 2025 federal budget, which heavily depends on petroleum revenues.
Unless production improves significantly in the coming months, the government may be forced to bridge a widening fiscal gap through fresh borrowing or spending cuts.
