President Bola Tinubu has signed a new Executive Order to lower project costs, attract foreign investors, and increase revenue from Nigeria’s oil sector. The Upstream Petroleum Operations Cost Efficiency Incentives Order, 2025, introduces fresh reforms that hopefully will make Nigeria’s oil and gas industry more competitive.
The Order creates a performance-driven structure that rewards oil companies for cutting costs while maintaining high standards. It ties tax incentives to proven savings and efficiency levels. It also introduces cost benchmarks for different terrains and caps tax credits to prevent revenue losses.
“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,” President Tinubu said.
Main Provisions of the Executive Order
The Order includes three main policies to encourage responsible and efficient spending:
- Performance-Based Tax Incentives: Companies that meet or exceed cost-reduction goals will receive specific tax breaks.
- Terrain-Specific Benchmarks: The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will release yearly cost benchmarks for onshore, shallow water, and deep offshore operations.
- Credit Caps for Fiscal Discipline: Companies can only claim tax credits up to 20% of their yearly tax liability. This helps protect Nigeria’s public income.
This Executive Order builds on the 2024 reforms, which improved contract processing times and aligned local content policies with international standards. The new directive moves the sector from planning to real performance delivery.
Nigeria Seeks a Resilient, Attractive Oil Industry
The Federal Government says the goal is not just to cut spending, but to make the oil sector more attractive and reliable for long-term investors.
Special Adviser on Energy, Olu Verheijen, said the Order would reward efficient operators and restore investor confidence in Nigeria’s oil industry.
“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.
President Tinubu has directed Verheijen to lead efforts to coordinate all relevant agencies for the smooth implementation of the Order.
The new framework is expected to help reduce corruption, speed up project timelines, and bring in more foreign direct investment into Nigeria’s oil industry, which remains the backbone of the economy.
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