President Bola Tinubu has signed a groundbreaking Executive Order aimed at reducing costs, attracting greater investment, and increasing revenue returns in Nigeria’s oil and gas industry.
Describing the move as a bold step to enhance efficiency and restore investor confidence, the President emphasized the strategic importance of the sector to Nigeria’s economic future.
The directive, titled Upstream Petroleum Operations Cost Efficiency Incentives Order, 2025, establishes a performance-based tax incentive framework designed to reward operators who achieve measurable cost savings in their projects.
Under the new framework, companies that meet or surpass cost-efficiency benchmarks—set annually by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and differentiated by terrain (onshore, shallow water, and deep offshore)—will qualify for significant fiscal incentives.
A key feature of the order allows qualifying companies to retain 50 percent of the incremental government revenue generated through their cost savings. To safeguard public finances, however, tax credits will be capped at 20 percent of each company’s annual tax liability.
“This is not about charity; it’s about value,” President Tinubu asserted. “Nigeria must attract investment with a credible promise of returns. This Order signals to the world that our oil and gas sector is being reformed to be efficient, competitive, and beneficial to all Nigerians. Every barrel must count—for jobs, growth, and our national future.”
To ensure effective implementation, President Tinubu has appointed his Special Adviser on Energy, Mrs. Olu Verheijen, to oversee inter-agency coordination and drive alignment among key government bodies.
“This reform is not just about cutting costs,” Verheijen stated. “It is a strategic initiative to make Nigeria’s upstream sector globally competitive and fiscally resilient. By incentivizing efficiency, we are boosting investor confidence and delivering greater value to the Nigerian people.”
Senan Murray, spokesperson for the Office of the Special Adviser on Energy, explained in a statement on Friday that the new Executive Order builds on reforms introduced in 2024, which improved fiscal terms, streamlined project timelines, and aligned local content requirements with international standards.
