President Bola Tinubu has issued a new Executive Order aimed at reducing oil production costs, attracting more investment, and enhancing revenues in Nigeria’s oil and gas sector by offering tax incentives tied to cost savings.

The Order mandates that 50% of incremental government gains from cost reductions will be returned to investors, with tax credits capped at 20% of a company’s annual tax liability, incentivizing efficient operations.

This initiative follows reforms that have attracted over $8 billion in investments for deepwater oil and gas projects and seeks to address Nigeria’s high production costs, which range from $25 to $48 per barrel compared to much lower costs in countries like Saudi Arabia.

The Nigerian Upstream Petroleum Regulatory Commission will annually benchmark costs across different terrains, and the reform is praised by the African Energy Chamber as a strategy to improve competitiveness, secure future production goals, and draw fresh investment.