President Bola Tinubu has signed a new Executive Order aimed at slashing oil production costs and boosting investor confidence in Nigeria’s oil and gas sector. The directive introduces tax incentives and performance-based rewards for efficient operators, in a bid to enhance competitiveness and revenue generation.
According to Special Adviser to the President on Energy, Olu Verheijen, the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) seeks to incentivise cost-effective production while maintaining government revenue. Under the Order, 50% of incremental government gains from cost savings will be returned to investors, and tax credits will be capped at 20% of annual tax liability.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will publish annual cost benchmarks for onshore, shallow, and deepwater operations, with companies rewarded for meeting or exceeding these targets. Detailed implementation guidelines will follow.
“This Order signals our intention to build an oil and gas sector that is efficient, competitive, and works for all Nigerians,” President Tinubu said, emphasizing that the reforms are vital to reducing high production costs — some of the highest globally, ranging from $25 to $48 per barrel — and improving project execution timelines.
Nigeria currently faces challenges such as bureaucratic bottlenecks, infrastructure gaps, and security issues, all contributing to elevated production costs. In contrast, producers like Saudi Arabia operate at significantly lower costs ($3–$10 per barrel), giving them a competitive edge.
The Executive Order builds on earlier reforms, including the Petroleum Industry Act (2021) and recent policy directives on local content, contract approval thresholds, and tax incentives for oil and gas companies.
Highlighting recent gains, Verheijen announced at the 2025 Africa CEO Forum in Abidjan that Nigeria had secured over $8 billion in new investments for deepwater oil and gas projects within a year — an outcome attributed to ongoing reforms under the Tinubu administration.
Commenting on the development, the African Energy Chamber (AEC) praised the move, calling it a timely strategy to reposition Nigeria as a top African producer. “This is a deliberate strategy to reward efficiency, strengthen investor confidence, and deliver greater value to the Nigerian people,” said AEC Chairman NJ Ayuk.
President Tinubu tasked Verheijen with leading inter-agency coordination to ensure effective execution of the new directive, reiterating the government’s commitment to economic transformation, job creation, and fiscal resilience through a reformed oil and gas sector.
