President Bola Ahmed Tinubu has signed a new Executive Order aimed at cutting the high cost of oil and gas production in Nigeria, increasing government revenue, and bringing in more foreign and local investment into the country’s energy sector. The announcement was made in a statement released on Thursday, May 30, 2025, by the Office of the Special Adviser to the President on Energy, Mrs Olu Verheijen.
The Executive Order, officially titled “Putting Every Barrel to Work: Nigeria’s New Presidential Directive on Cost Efficiency Targets New Investments, Improved Revenues and National Value”, introduces several fiscal and operational reforms. These reforms are expected to tackle the challenges of high operational costs in Nigeria’s upstream petroleum sector and make it more competitive in the global market.
A key part of the new directive is a cap on tax credits. According to the statement, oil and gas companies will no longer be allowed to claim tax credits above 20 percent of their annual tax liability. This means companies operating in the upstream oil sector will have to operate more efficiently, as the government aims to keep more of the revenue while still rewarding responsible operators.
The Order, officially named Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), will take effect from April 30, 2025. It introduces performance-based tax incentives. These will be available to companies that can prove they have made cost savings, based on defined benchmarks that will be published by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) each year.
According to the official gazette, Nigeria’s oil and gas sector has been struggling with high costs, mainly caused by long project timelines and strict local content rules. These issues have made Nigeria less attractive to investors compared to other oil-producing countries. The Executive Order aims to change this by enforcing cost discipline, streamlining processes, and ensuring local content requirements are in line with international standards.
The government says it is committed to managing petroleum resources better and wants to reduce the cost of production in the upstream sector. The new policy will promote fiscal discipline, reduce waste, and ensure Nigeria gets more value from its oil resources. Under the new rules, the Nigerian Upstream Petroleum Regulatory Commission will assess and publish yearly cost benchmarks for different terrains—onshore, shallow water, and deep offshore.
The Commission will also conduct yearly reviews to determine the Unit Operating Costs for each company. These reviews will help ensure that each oil operator is meeting its cost reduction targets. If companies fail to meet their targets, they may lose out on the new tax incentives.
President Tinubu has directed the Special Adviser on Energy to coordinate implementation of the Order and ensure all key agencies are aligned. Mrs Olu Verheijen will be responsible for turning the new policies into action and delivering real results. She stressed that the goal is not just to reduce costs for the sake of it, but to make Nigeria’s oil and gas sector more globally competitive and financially strong.
Speaking on her official X (formerly Twitter) account, Mrs Verheijen said the Executive Order links tax benefits to real, verifiable cost savings. It also introduces different cost standards for different operating environments—whether on land, in shallow waters or in deep offshore locations. She added that the cap on tax credits would protect Nigeria’s public revenue while still encouraging efficient operations.
She said, “Nigeria is raising the bar on upstream oil and gas reform. This Executive Order is a bold and smart step to make Nigeria’s oil sector more competitive and attractive to investors. At a time when oil prices are falling and global capital is hard to get, this reform sends a strong message that Nigeria is ready for business.”
The Executive Order builds on reforms already introduced by President Tinubu in 2024. These earlier reforms improved fiscal terms for oil companies, reduced the time it takes to get project approvals, and made local content rules more flexible and investor-friendly.
President Tinubu said the reforms are part of his administration’s plan to create jobs, grow the economy and make sure Nigeria gets the most value from every barrel of oil produced.
He said, “This is not about cutting costs just to save money. It’s about building an oil and gas sector that works for Nigerians. One that is efficient, transparent and attractive to investors. It’s about creating jobs, increasing revenue, and securing our future.”
With the 2025 Cost Efficiency Order now in place, oil and gas operators in Nigeria are expected to adjust their operations and deliver more value to the country. The government says further guidelines will be released soon to explain how companies can qualify for the incentives and what will be expected of them in return.
