President Bola Ahmed Tinubu has signed a new Executive Order aimed at reducing the cost of oil and gas production in Nigeria, encouraging investment, and boosting government revenue from the upstream petroleum sector.
The announcement was made on Thursday by the President’s Special Adviser on Energy, Olu Verheijen.
Titled the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), the directive introduces performance-based tax incentives for upstream operators that achieve measurable cost reductions in line with industry benchmarks. These benchmarks, categorized by terrain—onshore, shallow water, and deep offshore—will be published annually by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Implementation guidelines for the Order will be released shortly.
A key feature of the Order is the tax credit cap set at 20% of a company’s annual tax liability. This provision ensures that efficient operators are rewarded, while government revenues remain protected.
“Nigeria must attract investment inflows not out of charity, but because investors see real and lasting value,” said President Tinubu. “This Order sends a strong message: we are building an oil and gas sector that is efficient, competitive, and works for all Nigerians. It’s about securing our future, creating jobs, and making every barrel count.”
Verheijen added,
“This is not just about cost reduction. It’s a strategic move to make Nigeria’s upstream sector globally competitive and fiscally resilient. With this reform, we’re incentivizing efficiency, building investor confidence, and delivering better value to the Nigerian people.”
The Executive Order builds on the administration’s 2024 energy sector reforms, which improved fiscal terms for investors, reduced project timelines, and aligned local content requirements with international standards.
During a speech marking his second year in office, President Tinubu reaffirmed his commitment to revitalizing Nigeria’s oil and gas sector.
“The sector is recovering,” he noted. “Rig counts in 2025 are up over 400% compared to 2021, and more than $8 billion in new investments have been committed.”
This latest directive complements three earlier Executive Orders signed by the President on February 28, 2024, aimed at enhancing Nigeria’s investment climate:
- Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024
- Presidential Directive on Local Content Compliance Requirements, 2024
- Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024
Together, these measures position Nigeria as a more attractive and competitive destination for global oil and gas investors.
