In a strategic move to revitalize Nigeria’s oil and gas industry, President Bola Ahmed Tinubu has signed the Upstream Petroleum Operations Cost Efficiency Incentives Order, a new executive order aimed at reducing the operational costs for exploration and production companies while increasing government revenue from the sector.

This landmark directive, signed in May 2025, underscores the government’s commitment to making Nigeria’s upstream petroleum sector more attractive to investors, particularly amid global competition for energy capital and fluctuating oil prices.

What the Executive Order Entails

The Upstream Petroleum Operations Cost Efficiency Incentives Order is designed to:

• Reduce operational costs for oil and gas operators.

• Improve overall profitability and sustainability in Nigeria’s upstream sector.

• Enhance competitiveness of Nigeria’s oil fields against other global producers.

• Stimulate new investments in marginal and brownfield assets.

• Streamline fiscal terms under the Petroleum Industry Act (PIA).

According to the presidency, the order was developed in close collaboration with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Ministry of Petroleum Resources, after several months of industry consultations.

Context: High Costs, Low Margins

Nigeria’s upstream sector has long suffered from high production costs, averaging over $20 per barrel much higher than regional peers such as Angola. These inefficiencies have deterred foreign investment and reduced the country’s ability to meet OPEC quotas.

This executive order aims to reverse that trend by providing targeted fiscal relief and operational incentives to companies operating in Nigeria’s oil basins.

“The President’s move is a signal to the international energy market that Nigeria is serious about reforming its upstream environment,” said Gbenga Komolafe, Chief Executive of NUPRC.

Expected Impact

Analysts expect the executive order to:

• Unlock billions of dollars in dormant upstream investments.

• Improve Nigeria’s oil production output, which stood at 1.486 million barrels per day in April—still short of its 1.5 million OPEC quota.

• Generate higher government revenues through optimized production sharing and reduced inefficiencies.

• Position Nigeria as a more fiscally attractive destination for oil and gas capital.

Oil majors like Shell, TotalEnergies, and Chevron, which have been slowing investments in Nigeria due to policy uncertainties and high costs, may now revisit postponed projects in response to the new incentives.

Industry Reactions

Industry stakeholders have largely welcomed the order, viewing it as a much-needed intervention in a sector burdened by insecurity, infrastructure gaps, and regulatory bottlenecks.

“This executive order aligns with what investors have been asking for greater cost control, fiscal clarity, and a transparent policy framework,” noted Emeka Okafor, an energy analyst at Lagos-based Afrivest Consulting.

However, some experts stress that cost reduction alone will not be enough. For sustainable transformation, Nigeria must also address pipeline vandalism, crude theft, and foreign exchange challenges that hamper upstream logistics and repatriation of earnings.

Looking Ahead

The success of the executive order will depend on its implementation by relevant regulatory agencies and its integration into long-term energy planning. As global energy transitions accelerate, Nigeria’s ability to optimize oil and gas revenue while preparing for diversification is critical.

President Tinubu’s executive order could be a turning point for Nigeria’s petroleum industry, one that signals a business-friendly future while ensuring the sector continues to play a vital role in economic development.

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