Overview
IntroductionFor years, Nigeria’s oil and gas sector has grappled with high operating costs largely attributed to prolonged project execution timelines and rigid local content requirements. These inefficiencies have undermined the country’s attractiveness as an investment destination and reduced its competitive edge in the global market. In recognition of these challenges, the Federal Government of Nigeria has implemented targeted policy measures to address systemic inefficiencies in the sector.
In a strategic move to enhance operational efficiency and strengthen Nigeria’s competitiveness in the global oil and gas market, President Bola Ahmed Tinubu signed the Upstream Petroleum Operations (Cost Efficiency Incentives) Order, 2025, which came into effect on April 30, 2025, pursuant to the powers vested in him under the Constitution and the Companies Income Tax Act. The Upstream Petroleum Operations (Cost Efficiency Incentives) Order emerges as a critical regulatory instrument designed not only to address cost inefficiencies but also to align Nigeria’s upstream operations with global standards and best practices. The Order introduces a structured incentive framework aimed at reducing operating costs, promoting fiscal discipline, and maximising economic value from the upstream petroleum operations.
