President Bola Tinubu has signed an executive order to reduce the cost of oil and gas projects, increase government revenue, and accelerate investment in Nigeria’s energy industry.
According to a statement released on Thursday by the Office of the Special Adviser to the President on Energy, the order implements far-reaching fiscal changes that prioritise cost-efficiency, operational accountability, and national value retention.
Titled “Putting Every Barrel to Work: Nigeria’s New Presidential Directive on Cost Efficiency Targets New Investments, Improved Revenues and National Value”, the order sets a strong objective for reining in production expenses while giving globally competitive terms to serious investors.
According to the statement, one of the primary aspects of the executive order is a ceiling on tax credits, which limits them.
The administration noted that this move is intended to protect public revenues while rewarding efficiency and prudent operations in the upstream industry. The Order’s effective date is set for April 30, 2025.
The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) establishes performance-based tax incentives for upstream companies that achieve demonstrable cost savings while meeting set industry benchmarks.
A copy of the official gazette read, “The operating costs in the Nigerian oil and gas sector have been observed to be high compared to the global average, arising mainly from prolonged project execution timelines and local content requirements. The president has, in response to the high operating costs, issued policy directives on the reduction of oil and gas sector operating costs, contracting timelines and local content compliance requirements.
“The Federal Government of Nigeria is committed to efficient management of petroleum resources and reduction of petroleum cost in the upstream petroleum sector to enhance competitiveness and efficiency, and it has become necessary to provide additional measures to promote fiscal discipline, reduce operating cost and maximise Nigeria’s economic gains from the upstream petroleum operations through monitoring mechanisms and an appropriate regime of incentives.”
It also instructed the Nigerian Upstream Petroleum Regulatory Commission to publish annual benchmarks based on geography, onshore, shallow water, and deep offshore.
On an annual basis, the Commission shall conduct an assessment and benchmarking study to establish appropriate cost benchmarks for upstream operational activities and unit operating costs for onshore, shallow water, and deep offshore terrains; determine the cost benchmarks in accordance with guidelines issued by the Commission pursuant to the Petroleum Industry Act, provided that prior to the issuance of guidelines, the Commission shall consult with relevant stakeholders.
“With the objective of reducing the overall cost profile of petroleum operations, annually assign specific unit operating cost reduction targets for each terrain, taking into consideration the peculiarities of their operating environment and production volume, and conduct annual reviews within the tax return cycle of the lessee’s or licensee’s performance, with the key assessment metric being the unit operating costs to determine adherence to set targets,” it stated.
Furthermore, comprehensive implementation directions for the new order will be released in due time. Among other conditions, the order limits possible tax credits to 20% of a company’s yearly tax burden, conserving government income while providing strong fiscal terms to encourage efficient operators.
“Nigeria must attract investment inflows, not out of charity, but because investors are convinced of real and enduring value. This Order is a signal to the world: we are building an oil and gas sector that is efficient, competitive, and works for all Nigerians. It is about securing our future, creating jobs, and making every barrel count,” said President Tinubu.
To ensure that the new order is effectively implemented, the president has directed the special adviser on energy to manage inter-agency cooperation, ensuring alignment across key government institutions and converting policy intent into measurable outcomes.
“This is not a pursuit of cost reduction for its own sake. It is a deliberate strategy to position Nigeria’s upstream sector as globally competitive and fiscally resilient,” said the Special Adviser to the President on Energy, Mrs Olu Verheijen. “With this reform, we are rewarding efficiency, strengthening investor confidence, and ultimately delivering greater value to the Nigerian people.”
The new order builds on the administration’s 2024 presidential reform directives, which resulted in better budgetary terms, shorter project schedules, and linked local content policies with global best practices.
The Special Adviser to the President on Energy, speaking via her official X handle, stated that the Executive Order links tax incentives to verifiable cost savings, establishes terrain-specific cost benchmarks for onshore, shallow water, and deep offshore operations, and caps tax credits to protect government revenue while incentivising operational efficiency.
She said, “Nigeria is raising the bar on upstream oil & gas reform. Today, I’m proud to share that President Bola Ahmed Tinubu has issued a landmark presidential order on cost efficiency, a bold and pragmatic step to make Nigeria’s upstream sector more globally competitive, fiscally resilient, and investor-aligned.
“At a time when oil prices are softening and capital is more selective, the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) does three powerful things: Links tax incentives to verifiable cost savings, Establishes terrain-specific cost benchmarks (onshore, shallow water, deep offshore) and caps credits to protect government revenue while rewarding efficient operators.
“This Order builds on earlier reforms, including improved fiscal terms, faster contracting, and commercially aligned local content rules. Now we are shifting from intent to execution with performance, discipline, and value at the centre. Let’s work together to put every barrel to work for our economy, for investors, and for the future of Nigeria’s energy security.”
