President Bola Tinubu has signed a new Executive Order aimed at reducing operational expenses in Nigeria’s oil and gas sector and attracting fresh investment, in a strategic push to restore competitiveness and fiscal discipline in the industry.
The newly signed directive, titled “The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025),” introduces performance-based tax incentives for upstream operators that achieve verifiable cost reductions aligned with standards set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Under the new framework, companies that meet cost efficiency benchmarks can claim tax credits of up to 20% of their annual tax liability.
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Additionally, half of any incremental revenue the government realises through lower project costs will be returned to the qualifying investors.
The NUPRC will update and publish cost benchmarks annually for onshore, shallow water, and deep offshore operations.
The Special Adviser to the President on Energy, Olu Verheijen, announced the initiative, describing it as a carefully designed reform that balances government revenue protection with investor-friendly fiscal terms.
The Order arrives amid renewed interest in Nigeria’s oil and gas sector, with over $8 billion in fresh capital inflows recorded over the past year, largely directed at deepwater and gas ventures.
Verheijen had revealed the figure at the 2025 Africa CEO Forum in Abidjan, citing projects such as Shell’s Bonga North and TotalEnergies’ Ubeta as key examples of the sector’s renewed momentum.
President Tinubu has acknowledged the inefficiencies and excessive costs plaguing Nigeria’s upstream operations—where production costs can range from $25 to $48 per barrel, compared with major oil producers such as Saudi Arabia and Iraq, whose costs hover around $3 to $10 per arrel.
“Whereas, the operating costs in the Nigerian oil and gas sector have been observed to be high compared to global average, arising mainly from prolonged project execution timelines and local content requirements,” the Executive Order reads in part.
It continues, “Whereas, 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.

“Whereas, the Federal Government of Nigeria is committed to efficient management of petroleum resources and reduction of costs in upstream petroleum operations to enhance competitiveness and efficiency; and whereas, it has become necessary to provide additional measures to promote fiscal discipline, reduce operating costs and maximise Nigeria’s economic gains from the upstream petroleum operations through monitoring mechanisms and appropriate regime of incentives.”
The President also declared: “The objective of this Order is to establish a Cost Efficiency Incentive Objective (CEI) framework aimed at improving efficiency and enhancing Nigeria’s competitiveness in the global oil and gas sector by:
“Reducing operating costs in the upstream petroleum operations through achievable cost reduction measures, strategies and targets; promoting cost discipline among stakeholders in the upstream petroleum operations; improving operational performance and streamlining contract cycles; maximising economic value from the oil and gas sector; and offering tax incentives to companies which achieve or surpass cost reduction targets.”
The new order builds on a series of prior reforms under Tinubu’s administration, including: the oil and gas companies (tax incentives, exemption, remission, etc.) Order, 2024, presidential directive on local content compliance requirements, 2024, and presidential directive on reduction of petroleum sector contracting costs and timelines, 2024
These reforms aim to simplify regulatory processes and increase the threshold for contract approvals up to $10 million.
According to the President, the NUPRC will assess cost efficiency targets annually and define appropriate cost baselines across all operational terrains.
Companies that realise cost savings based on production volume and operational expenditure will qualify for fiscal rewards.
He stressed that the maximum tax credit claimable within any fiscal year shall not exceed 20% of the operator’s tax liability.
Tinubu further noted that the Executive Order marks a new phase in the country’s efforts to eliminate structural cost inefficiencies and optimise returns from its petroleum resources.
He tasked Verheijen with leading coordination efforts across government agencies to ensure seamless implementation and measurable results.
“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,” Tinubu stated.
Verheijen, in her remarks, affirmed that the policy direction rewards efficient operators and positions Nigeria’s upstream oil and gas sector for global competitiveness.
“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. With this reform, we are rewarding efficiency, strengthening investor confidence, and ultimately delivering greater value to the Nigerian people,” she said.
The African Energy Chamber (AEC) has also praised the initiative, describing it as timely and transformative.
NJ Ayuk, the Chamber’s Executive Chairman, welcomed the development, noting that it reinforces Nigeria’s ambitions to scale up both oil and gas production—targeting 2 million barrels per day (bpd) in oil and 12 billion standard cubic feet per day (bscf/d) in gas.
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“The executive order could not come at a better time for Nigeria. Targeting 2 million barrels per day (bpd) in oil production and 12 billion standard cubic feet per day (bscf/d) in gas production – up from the current 7.3 bscf/d, Nigeria requires significant levels of investment in both active fields and exploration blocks,” Ayuk said.
He also highlighted that the Order complements the Petroleum Industry Act (PIA) of 2021, which created a more structured and transparent regulatory framework for the sector.
“With both policies, Nigeria is expected to accelerate investment in exploration and production,” Ayuk added.