Tinubu Orders Reduction in Oil Project Costs
President Bola Tinubu has signed an Executive Order aimed at slashing oil and gas projects’ costs, improving government revenue, and accelerating investment inflow into Nigeria’s energy sector.
In a statement issued on Thursday by the Office of the Special Adviser to the President on Energy, the Federal Government said the directive introduces far-reaching fiscal reforms that prioritise cost-efficiency, operational accountability, and national value retention.
Titled “Putting Every Barrel to Work: Nigeria’s New Presidential Directive on Cost Efficiency Targets New Investments, Improved Revenues and National Value,” the order sets a bold agenda for reining in production expenses while offering globally competitive terms to serious investors.
According to the statement, one of the key provisions of the Executive Order is a cap on tax credits, limiting them to no more than 20 per cent of a company’s annual tax liability.
This measure, the government explained, is designed to protect public revenues while still rewarding efficiency and responsible operations in the upstream sector. The effective date of the Order is set for April 30, 2025.
The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) introduces performance-based tax incentives for upstream operators who deliver verifiable cost savings that meet defined industry benchmarks.
A copy of the official gazette read, “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.
“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.”
It also directed the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to publish benchmarks annually according to terrain, onshore, shallow water, and deep offshore.
The commission shall, on an annual basis, conduct an assessment and benchmarking study to establish appropriate cost benchmarks for upstream operational activities and Unit Operating Costs for onshore, shallow water, and deep offshore terrains; determine the cost benchmarks in accordance with guidelines issued by the Commission pursuant to the Petroleum Industry Act, provided that prior to the issuance of guidelines, the Commission shall consult with relevant stakeholders and publish the underlying methodology for the annual benchmarking;
“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,” it stated.
Additionally, detailed implementation guidelines for the new Order will be issued in due course. Among other provisions, the Order also caps available tax credits at 20 per cent of a company’s annual tax liability, protecting government revenues while still offering strong fiscal terms to incentivise efficient operators.
“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,” said President Tinubu.
To ensure effective implementation of the new Order, the President has tasked the Special Adviser on Energy to lead inter-agency coordination, ensuring alignment across key government institutions and translating policy intent into measurable outcomes.
“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,” said the Special Adviser to the President on Energy, Mrs Olu Verheijen. “With this reform, we are rewarding efficiency, strengthening investor confidence, and ultimately delivering greater value to the Nigerian people.”
The new Order builds on the administration’s 2024 presidential reform directives, which delivered improved fiscal terms, shortened project timelines, and aligned local content policies with global best practice.
Commenting via her official X handle, the Special Adviser to the President on Energy said 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 said, “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.”
