Tinubu Signs Incentive Order to Spur Nigeria’s Oil and Gas Investment Boom

In a major step to rejuvenate Nigeria’s oil and gas sector and drive large-scale investment, President Bola Ahmed Tinubu has signed the Upstream Petroleum Operations Cost Efficiency Incentives Order (2025). This executive order introduces performance-based tax incentives aimed at promoting cost-efficiency, enhancing national revenues, and ensuring global competitiveness for Nigeria’s energy industry.

The order reflects Tinubu's administration's strategy to create a more attractive and stable environment for upstream operators, especially at a time when Nigeria seeks to expand oil production to 2 million barrels per day (bpd) and gas output to 12 billion standard cubic feet per day (bscf/d).

Incentivizing Efficiency, Driving Reform

The new executive order rewards companies that deliver verifiable cost savings against industry benchmarks, which will be published annually by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). These benchmarks will vary depending on asset class, including onshore, shallow-water, and deepwater operations. To maintain fiscal discipline, the government has capped tax credits at 20% of a company's annual tax liability.

Olu Verheijen, Special Advisor to President Tinubu on Energy, will oversee the coordination between government agencies and industry operators, ensuring the streamlined implementation of the order and maximizing its benefits.

Building on the Foundation of the Petroleum Industry Act

This move builds upon the momentum of the landmark Petroleum Industry Act (PIA) of 2021, which introduced comprehensive reforms to the regulatory and fiscal framework of Nigeria’s petroleum sector. While the PIA established clarity and investor protection, the 2025 order further refines fiscal incentives to stimulate efficiency, reduce project costs, and unlock capital inflows.

The cumulative impact of these reforms is already being observed. In 2024 alone, Nigeria secured $6.7 billion in energy investments, including $5.5 billion for upstream asset acquisitions. Some of the key players accelerating their investments include:

• Renaissance Africa Energy: Planning a $15 billion investment across 32 oil and gas projects.

• ExxonMobil: Committing $1.5 billion to revitalize the Usan deepwater oilfield at OML 138, with an FID expected by Q3 2025.

• TotalEnergies and NNPC Ltd: Investing $550 million in a non-associated gas development project.

By 2029, Nigeria aims to attract $30 billion in oil and $5 billion in gas investments, a goal considered attainable through the combined impact of the PIA and the new executive order.

Strengthening Nigeria's Global Energy Standing

NJ Ayuk, Executive Chairman of the African Energy Chamber (AEC), praised the move, calling it “a testament to Nigeria’s commitment to strengthening its regulatory landscape.” He noted that with the executive order, Nigeria is poised to attract more capital, technology, and expertise essential to meeting ambitious production targets and unlocking untapped potential across its hydrocarbon basins.

“The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) positions the country as a globally competitive hydrocarbon market. It gives operators confidence in the government’s support for efficiency and return on investment,” said Ayuk.

Bridging the Investment Gap

Historically, Nigeria’s energy sector has faced underinvestment due to regulatory uncertainty, infrastructure limitations, and shifting global capital flows away from fossil fuels. The introduction of transparent, performance-linked incentives offers a pragmatic solution, making Nigeria one of the most investor-friendly oil jurisdictions in Africa.

The executive order is particularly timely as global oil majors and energy independents seek low-cost, high-return plays in stable, reform-driven environments. Nigeria’s upstream sector, with significant untapped reserves, is a strategic frontier for energy expansion.

Implementation and Outlook

NUPRC will play a central role in implementing and overseeing compliance with the order, including setting cost benchmarks, verifying performance metrics, and administering tax incentives. The Commission is also expected to work with energy operators to address bottlenecks in field development, expedite licensing processes, and improve transparency.

Additionally, the incentives are designed to promote operational discipline, discouraging cost overruns and waste, and encouraging the adoption of modern technology in exploration and production.

Reaffirming Energy Sector Centrality

Nigeria’s energy sector remains vital to the country’s economy, contributing nearly 90% of export earnings and a substantial share of government revenue. President Tinubu’s executive order reaffirms the administration’s vision to make the sector efficient, globally attractive, and resilient to market shocks.

With the new incentives in place, the government hopes to unlock fresh capital inflows, catalyze new projects, and secure Nigeria’s place as a dominant force in Africa’s energy future.