President Bola Ahmed Tinubu has introduced a new policy aimed at encouraging cost-saving measures in Nigeria’s oil and gas sector. Through an executive order signed this week, the government now offers tax relief to oil operators who successfully cut down on operating costs.

The new policy, called the Upstream Petroleum Operations Cost Efficiency Incentives Order 2025, allows oil companies to claim tax credits of up to 20% of their annual tax bill but only if they can show clear, verifiable cost savings in their operations. This applies to companies working in onshore, shallow water, and deep offshore fields.

“This is a message to the world that we are building a more efficient and competitive oil and gas industry — one that truly works for all Nigerians,” President Tinubu said. “It’s about securing our future, creating jobs, and making every barrel count.”

Industry experts agree that the idea is promising, but stress that the real test will be how well the policy is implemented. “If the government agencies can work together effectively, this could make Nigeria a more attractive place for investors,” said Clementine Wallop, Director for Sub-Saharan Africa at Horizon Engage.

This order is part of ongoing reforms by the Tinubu administration to boost Nigeria’s energy sector. Last year, the government introduced a 25% investment allowance for gas projects and also worked to simplify the process for approving contracts — efforts aimed at making offshore drilling more appealing.

While these incentives haven’t led to the launch of new oil fields yet, they have encouraged some companies to return to existing operations. It’s a step in the right direction for a sector that remains crucial to Nigeria’s economy.

Source: Reuters