Nigeria’s Oil Royalties Surge 180% in 2024 Despite Drop in Crude Sales Profits

The federal government’s revenue from oil and gas royalties skyrocketed by 179.74 percent in the 2024 fiscal year, rising from N2.49 trillion in 2023 to N6.99 trillion, according to the Budget Implementation Report for Q4 2024 released by the Budget Office of the Federation. The royalties now account for 46 percent of Nigeria’s total oil and gas revenue, firmly establishing them as the dominant contributor.

Royalties are payments made by oil companies for the right to extract petroleum resources in Nigeria. The report revealed quarterly collections of N1.243 trillion, N1.379 trillion, and N2.184 trillion in both the third and fourth quarters.

Analysts attribute the surge to the implementation of the Petroleum Industry Act (PIA) and tax incentives for deep offshore projects introduced under President Tinubu’s administration. Etulan Adu, an oil and gas analyst, told BusinessDay that these measures have encouraged new investments in the upstream sector, boosted production, and improved fiscal policy outcomes. “The increase in royalties reflects a positive trajectory for Nigeria’s oil and gas investments, particularly offshore,” Adu said, while cautioning that royalties alone cannot substitute for revenue from actual oil and gas production.

Despite the surge in royalties, gross profit from crude oil and gas sales declined sharply by 43.32 percent to N1.08 trillion in 2024, falling 26.3 percent below the budgeted N1.46 trillion and highlighting ongoing challenges such as crude theft, pipeline vandalism, and underinvestment, according to Abuja-based analyst Adeyemi Taiwo.

Other oil revenue streams showed mixed results: gas flared penalties and exchange gains contributed N391.26 billion and N4.243 trillion respectively, while petroleum profit and gas taxes generated N6 trillion, falling short of the N11.978 trillion target. Incidental oil revenue from royalty recovery and marginal field settlements added N347.75 billion, and pipeline fees and concessional rentals contributed N35.2 billion and N23.71 billion.

Overall, Nigeria collected N15.066 trillion in gross oil revenue in 2024, representing a 24.65 percent shortfall from the N19.99 trillion projected but an 80.33 percent increase over the N8.35 trillion actually collected in 2023.