ABUJA, Nigeria (VOICE OF NAIJA)-President Bola Tinubu has signed a new Executive Order designed to cut costs in oil and gas projects, boost government revenue, and attract greater investment into Nigeria’s energy sector.
According to a statement issued Thursday by the Office of the Special Adviser to the President on Energy, the directive introduces sweeping fiscal reforms with a focus on cost-efficiency, operational accountability, and retention of national value.
The Executive Order, titled “Putting Every Barrel to Work: Nigeria’s New Presidential Directive on Cost Efficiency Targets New Investments, Improved Revenues and National Value,” outlines a strategic framework to curb production expenses while offering competitive terms to credible investors.
Among its key measures is a tax credit cap, limiting claims to no more than 20 percent of a company’s annual tax liability.
The Federal Government noted this is intended to safeguard public revenue while continuing to reward efficient and responsible practices in the upstream oil sector.
The order takes effect from April 30, 2025.
Formally named the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), the directive introduces performance-linked tax incentives for upstream operators who achieve verifiable cost reductions that meet defined industry standards.
A copy of the gazette explains that “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.”
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It adds that “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 appropriate regime of incentives.”
To implement the directive, the Nigerian Upstream Petroleum Regulatory Commission has been tasked with publishing annual benchmarks based on terrain onshore, shallow water, and deep offshore.
The Commission will conduct annual assessments and benchmarking studies to determine appropriate cost benchmarks and Unit Operating Costs, in line with guidelines under the Petroleum Industry Act.
It is required to engage stakeholders and publish the methodology used for benchmarking.
The gazette further states: “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.”
The Federal Government has announced that detailed implementation guidelines for the new Executive Order will be released in due course.
Among its provisions, the Order places a ceiling on tax credits, limiting them to 20 percent of a company’s annual tax liability.
This aims to protect public revenues while maintaining strong fiscal incentives for operators who demonstrate efficiency.
President Bola Tinubu underscored the broader intent of the reform, stating: “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.”
To ensure the effective rollout of the directive, the President has designated the Special Adviser on Energy to oversee inter-agency coordination.
The adviser will work to align key government institutions and translate policy direction into actionable and measurable results.
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Speaking on the reform, Special Adviser to the President on Energy, Mrs Olu Verheijen, said: “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.”
The Executive Order builds upon the administration’s 2024 policy framework, which introduced improved fiscal regimes, reduced project delivery timelines, and restructured local content policies to meet international standards.
Further elaborating via her official X handle, Verheijen explained that the Executive Order “links tax incentives to verifiable cost savings, introduces terrain-specific cost benchmarks for onshore, shallow water, and deep offshore operations, and caps tax credits to safeguard government revenue while incentivising operational efficiency.”
She added “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.”