President Bola Tinubu has signed a new Executive Order targeting cost reduction, increased investment, and higher revenue returns in Nigeria’s oil and gas sector,
The President explained that the decision was a bold step to drive efficiency and revive investor confidence in nation’s oil and gas sector.
The directive, titled Upstream Petroleum Operations Cost Efficiency Incentives Order, 2025, introduces a framework of performance-based tax incentives aimed at rewarding operators who achieve measurable cost savings in their oil and gas projects.
According to the Order, companies that meet or exceed industry cost-efficiency benchmarks, set annually by the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, will be eligible for significant fiscal rewards. These benchmarks will vary by terrain: onshore, shallow water, and deep offshore.
Crucially, the new regime allows qualifying companies to retain 50 percent of the incremental government revenue generated from their cost savings. However, to preserve public revenue, available tax credits will be capped at 20 percent of a company’s annual tax liability.
“This is not about charity, it’s about value,” President Tinubu stated.
“Nigeria must attract investment based on a credible promise of returns. This Order signals to the world that our oil and gas sector is being reformed to become efficient, competitive, and beneficial to all Nigerians. Every barrel must count, for jobs, growth, and our national future.”
To ensure smooth and effective implementation, the President has tasked his Special Adviser on Energy, Mrs. Olu Verheijen, with overseeing inter-agency coordination and driving alignment across key government institutions.
“This reform is not just about slashing costs,” Verheijen emphasized. “It’s a strategic effort to make Nigeria’s upstream sector globally competitive and fiscally resilient. By incentivizing efficiency, we are boosting investor confidence and ensuring greater value for the Nigerian people.”
Senan Murray, Office of the Special Adviser to the President on Energy, in a statement, on Friday, explained, the new Executive Order builds on previous reforms introduced in 2024, which enhanced fiscal terms, streamlined project timelines, and aligned local content requirements with international standards.
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