Tinubu Signs Executive Order to Slash Oil Project Costs and Attract Investment

In a strategic move aimed at revitalizing Nigeria’s oil and gas sector, President Bola Tinubu has signed a landmark Executive Order designed to cut upstream petroleum project costs and stimulate fresh investment. The order, officially named the Upstream Petroleum Operations Cost Efficiency Incentives Order, 2025, introduces a system of performance-based tax incentives for oil operators who achieve verifiable cost savings, signaling a major policy shift in the country’s approach to managing its energy resources.

This Executive Order comes at a critical time for Nigeria, which has been battling declining production, underinvestment, and an increasingly competitive global energy landscape. The Tinubu administration believes the move will not only reduce project development costs but also ensure that the country remains an attractive destination for investors seeking returns in the oil and gas space.

The order tasks the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) with setting annual cost-efficiency benchmarks for oil producers, tailored to different operational terrains—onshore, shallow water, and deep offshore. Companies that meet or exceed these benchmarks will be eligible for substantial fiscal incentives. Among these are tax credits of up to 20% of their annual tax obligations and the right to retain 50% of any incremental government revenue generated through cost-saving measures.

In signing the order, President Tinubu emphasized that Nigeria’s energy sector must evolve to remain globally competitive. “This is not about charity,” he said during the announcement. “It’s about value. Nigeria must attract investment based on a credible promise of returns.” His statement highlights a broader policy vision focused on value-driven governance, where incentives are tied directly to performance and measurable economic impact.

The Executive Order builds on a series of reforms introduced in 2024, which sought to enhance the country’s fiscal regime, streamline project timelines, and update local content regulations to better align with global industry standards. The new directive expands those efforts by offering a clear and rewarding structure for companies that can demonstrate cost-efficiency while maintaining operational integrity.

Energy experts have praised the move as a step in the right direction, but they caution that success will depend largely on transparent and consistent implementation. There are concerns about whether relevant government agencies, including the NUPRC, Federal Inland Revenue Service (FIRS), and the Nigerian Content Development and Monitoring Board (NCDMB), can effectively coordinate to ensure the policy’s objectives are realized without bottlenecks.

To address these concerns, President Tinubu has appointed his Special Adviser on Energy, Olu Verheijen, to lead inter-agency coordination efforts. Verheijen will be responsible for aligning key institutions and ensuring that the incentives translate into tangible results on the ground. This centralized oversight is expected to reduce red tape and build confidence among stakeholders who are eager for clarity and predictability in the regulatory environment.

The significance of the Executive Order extends beyond fiscal policy. It is also part of Nigeria’s broader effort to increase oil output, create jobs, and boost government revenue. Currently, the country is producing well below its OPEC quota, a trend that has raised concerns among policymakers. Industry insiders point out that high operational costs, complex regulations, and frequent security challenges in oil-producing areas have all contributed to Nigeria’s underperformance.

By reducing project costs, the government hopes to encourage both local and international firms to invest in new exploration and development projects. For indigenous companies, which often face difficulties accessing financing, the new incentives could be the difference between launching a viable project or shelving it due to budgetary constraints.

Moreover, the policy could have ripple effects across the economy. Lower project costs may lead to faster project execution, increased employment opportunities, and more infrastructure development in oil-producing regions. It also positions Nigeria to better compete with emerging oil-producing countries that are offering more investor-friendly environments.

However, the policy is not without risks. Critics argue that if not properly monitored, companies might manipulate cost reports to qualify for incentives. Others are concerned that the retention of 50% of incremental revenue could reduce funds available to the federal government unless properly capped and audited. Still, the overall consensus is that the move represents a bold and pragmatic approach to overcoming longstanding challenges in the sector.

As Nigeria works to reposition its economy amid global energy transitions, this Executive Order could mark a turning point in how the country manages its most critical natural resource. For operators, the message is clear: deliver efficiently and you will be rewarded. For regulators and policymakers, the task ahead is to ensure that the new incentives lead to meaningful outcomes without opening new avenues for abuse.

 

The success of the order will depend not only on the commitment of companies to lower their costs but also on the government’s ability to enforce transparency, maintain regulatory discipline, and continually adapt to global market dynamics. If all the pieces come together, Nigeria could enter a new phase of energy development marked by higher productivity, lower costs, and increased investor confidence.