Nigerian President Bola Ahmed Tinubu has signed an executive order aimed at reducing operational costs and increasing revenue from oil and gas projects. The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) introduces performance-based tax incentives for upstream operators to attract investment, driving sectoral development, and unlocking greater value from the nation’s oil and gas resources.
The African Energy Chamber (AEC), the voice of the African energy sector, has commended the Nigerian government for its ongoing commitment to improving the operating environment for oil and gas companies and enhancing the country’s global competitiveness. According to the AEC, the new executive order reflects a strategic effort to transform the sector. With this reform, Nigeria is well-positioned to attract fresh investments into its upstream oil and gas industry, reaffirming its status as one of Africa’s leading energy producers.
The order introduces tax incentives for upstream operators who achieve verifiable cost savings in line with predefined industry benchmarks. These benchmarks—tailored to asset types such as onshore, shallow-water, and deepwater—will be published annually by the Nigerian Upstream Petroleum Regulatory Commission. To balance investor incentives with fiscal responsibility, the executive order caps available tax credits at 20% of a company’s annual tax liability. This ensures continued government revenue while maintaining a competitive fiscal environment.
Olu Verheijen, Special Adviser to the President on Energy, will lead inter-agency coordination efforts to ensure that operators are able to fully leverage the opportunities presented by the executive order.
The timing of this reform is critical. Nigeria is targeting oil production of two million barrels per day (bpd) and gas production of 12 billion standard cubic feet per day (bscf/d), up from the current 7.3 bscf/d. Meeting these goals requires significant investment in both existing fields and new exploration blocks. Although the country has experienced a decline in oil and gas investment due to regulatory uncertainty and shifting global energy trends, recent reforms are reversing that trajectory.
The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) builds on the momentum of the Petroleum Industry Act (PIA), enacted in 2021, which established a comprehensive framework for the sector. Together, these policies are expected to catalyze exploration and production activity across Nigeria’s upstream industry.
The positive impact of the PIA is already evident. Energy companies—ranging from global majors to local independents and the national oil company—are making significant investments. Renaissance Africa Energy, a consortium of independents, plans to invest $15 billion across 32 oil and gas projects. ExxonMobil is injecting $1.5 billion into revitalizing the Usan deepwater oilfield (OML 138), while TotalEnergies and the Nigerian National Petroleum Company are investing $550 million in a non-associated gas project. ExxonMobil is expected to reach a final investment decision on the Usan field by Q3 2025.
In 2024, Nigeria secured $6.7 billion in investments, of which $5.5 billion was directed toward oil and gas asset acquisitions. With the dual thrust of the PIA (2021) and the new executive order (2025), the government expects to attract even greater capital inflows. Nigeria aims to unlock $30 billion in oil and $5 billion in gas investments by 2029.
“This recent executive order is a testament to Nigeria’s commitment to strengthening its regulatory landscape, improving fiscal terms, and enhancing revenue generation across the oil and gas industry,” said NJ Ayuk, Executive Chairman of the AEC. “The order is expected to play a significant role in attracting new investment into the country at a time when national production goals demand greater capital and technology deployment. The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) positions Nigeria as a globally competitive hydrocarbon market.”
