President Bola Tinubu has signed a new executive order to reduce oil production costs and attract investment to Nigeria’s oil and gas sector. Olu Verheijen, the Special Adviser to the President on Energy, announced this initiative as part of Tinubu’s broader strategy to enhance the industry’s efficiency and competitiveness.
The new order offers tax incentives and rewards for companies that achieve verifiable cost savings in oil production. Specifically, investors will receive 50% of the incremental government gain from these savings, while tax credits will cap at 20% of a company’s annual tax liability. Furthermore, the order establishes a framework for performance-based tax incentives for upstream operators who meet defined industry benchmarks, which the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will publish annually.
This initiative directly addresses Nigeria’s high oil production costs, which range from $25 to $48 per barrel. These costs significantly exceed those of low-cost producers like Saudi Arabia and Iraq. Therefore, the government aims to streamline operations and reduce bureaucratic hurdles that inflate these expenses.
Consequently, the executive order should boost investor confidence in Nigeria’s oil sector. Recently, the sector attracted over $8 billion in investments for deepwater projects, which stem from previous reforms under Tinubu’s administration. The President stressed that this initiative aims to create a competitive and efficient oil and gas sector that benefits all Nigerians. He tasked Verheijen with ensuring effective implementation and aligning key government institutions to achieve measurable outcomes.
Overall, this new executive order marks a significant step in Tinubu’s efforts to revitalize Nigeria’s oil and gas industry and secure the country’s economic future through enhanced investment and operational efficiency.
