By Jemimah Wellington, JKNewsMedia Reporter
TRANSOFRMATIVE POLICY reforms are set to overhaul Nigeria’s oil and gas sector through a newly signed Executive Order by President Bola Ahmed Tinubu.
Designed to reduce project costs, boost investor confidence, and increase government revenue, the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) signals a decisive turn toward performance-driven reforms in upstream operations.
The Order offers tax-based rewards for companies that demonstrate verifiable cost savings above annually published benchmarks set by the Nigerian Upstream Petroleum Regulatory Commission.
These benchmarks will be terrain-specific, covering onshore, shallow water, and deep offshore operations, and will serve as the basis for measuring operator performance. Implementation guidelines are expected to follow shortly.
In a strategic move to balance government revenue protection with fiscal incentives, the Order caps available tax credits at 20 percent of a company’s annual tax liability.
At the same time, it promises to return 50 percent of any incremental government gains arising from operators’ cost reductions—a framework that both safeguards public funds and encourages operational excellence.
Speaking on the rationale behind the reform, President Tinubu stressed the importance of repositioning Nigeria’s upstream sector as globally competitive.
“Nigeria must attract investment inflows, not out of charity, but because investors are convinced of real and enduring value,” he said.
“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.”
To operationalise the reform, the President has directed the Special Adviser on Energy to lead inter-agency coordination, ensuring that implementation aligns with the policy’s objectives and delivers tangible outcomes.
Mrs. Olu Verheijen, the President’s Special Adviser on Energy, underscored the strategic importance of the new Order. “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.”
The Executive Order builds on earlier directives issued by the administration in 2024, which improved fiscal terms, accelerated project timelines, and harmonised local content policy with global industry standards.
For those interested in getting the full gazetted Executive Order, the statement said it is available for download via https://www.energyreforms.ng
