Market News

Nigeria's president Bola Tinubu has signed an executive order designed to reduce costs and increase revenue from oil and gas projects.

The new upstream petroleum operations cost efficiency incentives order, 2025, offers tax relief to companies demonstrating cost-cutting measures in their operations.

The executive order aims to encourage cost reduction, stimulate investment and enhance revenue returns in Nigeria's oil and gas industry.

President Tinubu described the initiative as a decisive step to foster efficiency and renew investor trust in the sector.

The incentives are structured to reward operators that achieve cost savings against industry benchmarks established by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

The benchmarks, which will be adjusted annually, will differ depending on operational terrain including onshore, shallow water and deep offshore locations.

Operators who meet or surpass these benchmarks can retain up to 50% of the additional government revenue derived from their cost-efficiency efforts.

However, to protect public finances, the tax credits offered will be limited to 20% of a company's yearly tax obligation.

Tinubu stated: “This is not about charity, it is about value. Nigeria must attract investment based on a credible promise of returns. This Order signals to the world that our oil and gas sector is being reformed to become efficient, competitive and beneficial to all Nigerians. Every barrel must count, for jobs, growth and our national future.”

To ensure smooth and effective implementation, the president has tasked his Special Adviser on Energy, Olu Verheijen, with overseeing inter-agency coordination and driving alignment across key government institutions.

Verheijen added: “This reform is not just about slashing costs. It is a strategic effort to make Nigeria’s upstream sector globally competitive and fiscally resilient. By incentivising efficiency, we are boosting investor confidence and ensuring greater value for the Nigerian people.”

Senan Murray, from the Office of the Special Adviser to the President on Energy, stated that this executive order builds upon earlier reforms from 2024.

These reforms improved fiscal conditions, expedited project timelines and harmonised local content demands with global standards, laying the groundwork for the current incentives.

"Nigeria introduces oil tax relief for cost savings" was originally created and published by Offshore Technology, a GlobalData owned brand.