Tinubu Signs Landmark Order to Cut Oil Project Costs, Boost Investment.

President Bola Tinubu has taken a bold step to reform Nigeria’s oil and gas sector by signing a new Executive Order aimed at cutting project costs, boosting government revenue, and attracting more investment into the country’s energy industry. The order, titled “Putting Every Barrel to Work: Nigeria’s New Presidential Directive on Cost Efficiency Targets New Investments, Improved Revenues and National Value,” sets out a series of major changes to make Nigeria’s oil sector more efficient and globally competitive.

The Executive Order, which takes effect from April 30, 2025, introduces strict cost controls and new incentives for oil companies. One of the key features is a cap on tax credits, limiting them to no more than 20% of a company’s annual tax liability. This move is designed to protect public revenue while still encouraging companies to operate efficiently and responsibly in the upstream sector.

The order also introduces performance-based tax incentives for oil and gas operators who can prove they have achieved real cost savings that meet industry benchmarks. These benchmarks will be set and published every year by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and will be different for onshore, shallow water, and deep offshore oilfields.

A government statement explained, “The operating costs in the Nigerian oil and gas sector have been observed to be high compared to the global average, arising mainly from prolonged project execution timelines and local content requirements. The President has, in response to the high operating costs, issued policy directives on the reduction of oil and gas sector operating costs, contracting timelines and local content compliance requirements”.

The new policy means that every oil company will be given specific cost-reduction targets each year, depending on the terrain where they operate. The NUPRC will review each company’s performance annually, using these targets to determine if they qualify for the new tax incentives. The commission will also publish the methodology for setting these benchmarks and consult with stakeholders to ensure transparency.

President Tinubu said the new order is about more than just saving money:

“Nigeria must attract investment inflows, not out of charity, but because investors are convinced of real and enduring value. 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 make sure the new order is properly carried out, Tinubu has directed his Special Adviser on Energy, Mrs. Olu Verheijen, to lead coordination between government agencies.

At this point, Mrs. Olu Verheijen emphasized the significance of the reform, saying:

“Nigeria is raising the bar on upstream oil & gas reform. Today, I’m proud to share that President Bola Ahmed Tinubu has issued a landmark Presidential Order on Cost Efficiency, a bold and pragmatic step to make Nigeria’s upstream sector more globally competitive, fiscally resilient, and investor-aligned.”

She further explained:

“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 new Executive Order builds on previous reforms from 2024, which improved fiscal terms for investors, shortened project timelines, and aligned local content requirements with international best practices. The government hopes these changes will help lower Nigeria’s oil production costs, which have long been higher than the global average, and make the country a more attractive destination for oil and gas investment.

Industry experts say the move could be a turning point for Nigeria’s energy sector, especially as the government also works to increase oil production, improve energy security, and support the country’s economic growth. The reforms are expected to create more jobs, generate more revenue for the government, and ensure that Nigeria’s oil resources are managed more efficiently for the benefit of all Nigerians.

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