From Juliana Taiwo-Obalonye, Abuja
In a move to enhance Nigeria’s oil and gas industry, President Bola Tinubu has signed a groundbreaking Executive Order aimed at reducing operational costs, attracting fresh investment, and maximizing government revenues from upstream petroleum activities.
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According to a statement issued by Senan Murray, Office of the Special Adviser to the President on Energy, the newly introduced Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) establishes a performance-based tax incentive framework. Under this scheme, oil and gas operators who achieve measurable cost savings against benchmarks set annually by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will be rewarded with significant fiscal benefits.
The benchmarks will be tailored to different operating environments—onshore, shallow water, and deep offshore—ensuring realistic and fair targets. Operators who surpass these targets will receive a share of the government’s incremental gains, with 50% of the additional revenue generated from their efficiency improvements returned to them. However, tax credits are capped at 20% of a company’s yearly tax liability to safeguard national revenues.
President Tinubu stressed that the strategic importance of the policy, stating, “Our goal is to create an oil and gas sector that is not only profitable but sustainable and competitive on the global stage. The statement said Nigeria is committed to fostering an environment where efficiency is rewarded, and every barrel produced contributes meaningfully to our nation’s prosperity.”
To oversee the policy’s rollout, the President tasked the Special Adviser on Energy, Olu Verheijen to coordinate efforts across government agencies, ensuring that the reform translates into tangible improvements on the ground.
Verheijen, highlighted the broader vision behind the reform: “This is more than just cutting costs—it’s about transforming Nigeria’s upstream oil sector into a model of fiscal discipline and global competitiveness. By incentivizing efficiency, we are boosting investor confidence and ultimately delivering greater value to Nigerians.”
This new directive complements last year’s reforms, which streamlined fiscal terms, accelerated project approvals, and enhanced local content regulations to align with international standards.
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