In a strategic move to revitalize Nigeria’s oil and gas industry, President Bola Ahmed Tinubu has signed an Executive Order aimed at reducing project costs, enhancing government revenue, and attracting increased investment into the energy sector.
The directive, titled “Putting Every Barrel to Work: Nigeria’s New Presidential Directive on Cost Efficiency Targets New Investments, Improved Revenues and National Value,” introduces comprehensive fiscal reforms that prioritize cost-efficiency, operational accountability, and national value retention.
A key provision of the Executive Order is the implementation of performance-based tax incentives for upstream operators who achieve verifiable cost savings meeting defined industry benchmarks. Additionally, the Order caps available tax credits at 20% of a company’s annual tax liability, a measure designed to protect public revenues while still rewarding efficiency and responsible operations in the upstream sector.
To ensure effective implementation, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is mandated to publish annual benchmarks according to terrain—onshore, shallow water, and deep offshore. The commission will conduct assessments and benchmarking studies to establish appropriate cost benchmarks for upstream operational activities and Unit Operating Costs for each terrain, taking into consideration the peculiarities of their operating environment and production volume.
President Tinubu emphasized that this Order is a signal to the world that Nigeria is building an oil and gas sector that is efficient, competitive, and beneficial for all Nigerians. He stated, “It is about securing our future, creating jobs, and making every barrel count.”
Special Adviser to the President on Energy, Mrs. Olu Verheijen, highlighted that the reform links tax incentives to verifiable cost savings, introduces terrain-specific cost benchmarks, and caps tax credits to safeguard government revenue while incentivizing operational efficiency. She noted that this Order builds on earlier reforms, including improved fiscal terms, faster contracting, and commercially aligned local content rules.
The Executive Order is part of the administration’s broader efforts to improve the investment climate and position Nigeria as the preferred investment destination for the oil and gas sector in Africa. It follows previous directives aimed at introducing fiscal incentives for non-associated gas, midstream, and deepwater developments, reducing contracting costs and timelines, and promoting cost efficiency in local content requirements.
Industry stakeholders have welcomed the Order, viewing it as a significant step towards enhancing competitiveness and efficiency in Nigeria’s oil and gas sector. The implementation of these reforms is expected to attract new investments, boost production, and ultimately contribute to the nation’s economic growth and energy security.