President Bola Ahmed Tinubu has signed a landmark Executive Order aimed at slashing project costs, attracting fresh investment, and increasing national revenue from Nigeria’s vital oil and gas sector.
Titled the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), the directive introduces a suite of performance-based tax incentives designed to reward oil and gas companies that achieve measurable cost savings in line with new industry benchmarks.
Under the policy, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will annually publish cost benchmarks for upstream operations across onshore, shallow water, and deep offshore terrains. Companies that meet or exceed these targets will benefit from fiscal rewards, including a return of 50% of incremental government gain generated through cost savings.
To balance investor incentives with the protection of public revenue, the Order also caps tax credits at 20% of a company’s annual tax liability, ensuring the government retains a robust fiscal position while still encouraging efficiency.
“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,” said President Tinubu. “It is about securing our future, creating jobs, and making every barrel count.”
Implementation of the directive will be coordinated by the Office of the Special Adviser to the President on Energy, tasked with ensuring cross-agency alignment and driving measurable outcomes.
Special Adviser on Energy, Mrs. Olu Verheijen, underscored the strategic nature of the reform, emphasizing its goal of making Nigeria’s upstream sector more globally competitive.
“This is not a pursuit of cost reduction for its own sake,” she said. “With this reform, we are rewarding efficiency, strengthening investor confidence, and ultimately delivering greater value to the Nigerian people.”
The 2025 Order builds upon the Tinubu administration’s earlier 2024 reforms, which improved fiscal terms for investors, reduced project cycle times, and aligned local content requirements with international best practices.
Industry watchers say the move could unlock significant new investments in Nigeria’s oil sector, historically challenged by high operational costs and regulatory uncertainty.
The full implementation guidelines for the Order will be released in the coming weeks, providing further clarity on eligibility, benchmarks, and verification processes.
