Nigeria Reaps Just 5% of Revenue from Crude Oil Exports, Expert Reveals
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Despite holding the title of Africa’s largest crude oil producer, Nigeria retains a paltry 5% of the total revenue generated from its crude oil exports, a glaring disparity that underscores systemic inefficiencies in the nation’s oil sector.
This revelation was made by Professor Kayode Soremekun, a political scientist at the University of Lagos, during a one-day symposium on the Nigerian Petroleum Industry held in Abuja. Speaking at the event, which was themed “Nigerian Petroleum Industry: The Way Forward,” Soremekun highlighted how unremitted components of Nigerian crude contribute to the nation’s dwindling oil revenues.
Missing Millions in Crude Components
The professor pointed to the Direct Sale Direct Purchase (DSDP) programme, a scheme introduced in 2016 by the Nigerian National Petroleum Company Limited (NNPCL) to trade crude oil for refined petroleum products, as a significant contributor to the revenue shortfall.
While crude oil is exchanged for petrol and other refined products, other valuable components—such as Paraffins, Cycloalkanes, and Sulfur Compounds—are retained in the refining countries, with accrued revenues never making it to Nigeria’s federation account.
“Every crude oil tanker that leaves Nigeria represents a monumental loss. The smallest tanker, when its components are refined and sold abroad, could pay the salaries of senior staff for six months,” Soremekun said.
He lamented that Nigeria’s focus remains narrowly fixated on the upstream segment of oil production, neglecting the midstream and downstream stages, which hold significant economic potential.
“This anomaly masks every aspect of the Nigerian economy,” he said. “We export raw materials, exporting jobs to other countries in the process.”
Lessons from Global Peers
Drawing comparisons to oil-producing nations such as Norway, Indonesia, and Malaysia, Soremekun argued that Nigeria must adopt a comprehensive and inclusive approach to oil sector policy. He emphasized that the country’s oil wealth could only be salvaged by rethinking its policy direction and embracing practices that prioritise domestic value addition and sustainability.
“Norway uses its oil wealth to build enduring structures for its citizens, but in Nigeria, we continue to behave as ignorant outsiders in an industry that defines our economy,” he added.
A Call for Reform
The symposium, organised by Class Masters Ltd in partnership with the NNPCL, brought together industry stakeholders to address critical issues facing the oil sector, including energy transition, insecurity, and environmental concerns.
Paddy Ezeala, Managing Director of Class Masters Ltd, highlighted the need for collective action in confronting emerging challenges. “This industry has been with us for nearly 70 years. We must chart a way forward that aligns with economic, social, and environmental realities. The public must also be more aware of how issues like insecurity are affecting oil production and why we struggle to meet our OPEC quotas,” he said.
A Future Beyond Oil
As Nigeria grapples with the pressures of energy transition and mounting global competition, the symposium called for a fundamental rethinking of how the nation manages its most valuable resource. For a country that has long basked in the glow of oil wealth, the challenge now lies in ensuring that this wealth works for its people.
The call for reform, while urgent, is also a call for hope—a hope that Nigeria can rise above its extractive economy and reclaim its rightful share of the global oil market.
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