On 30 April 2025, the President of the Federal Republic of Nigeria, Bola Ahmed Tinubu, signed into law the Upstream Petroleum Operations (Cost Efficiency Incentives) Order, 2025 (hereafter referred to as "the Order") via Statutory Instrument No. 22 of 2025. This reform initiative, published in the Federal Gazette No. 87 Vol. 112, introduces a Cost Efficiency Incentive (CEI) framework aimed at tackling persistent inefficiencies and cost overruns within Nigeria's upstream petroleum sector.
The Order represents a key strategic policy shift by the Federal Government to reduce the operating costs of petroleum activities, enhance fiscal and operational discipline among industry players, and bring Nigeria's upstream cost structure in line with global best practices. The CEI framework provides performance-based tax credits to operators that meet or exceed cost reduction targets established by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC or "the Commission"), thereby linking fiscal benefits directly to proven operational efficiency.
The Order takes effect from 30 April 2025 and remains in force until 31 May 2035. It applies to all lessees, licensees, and their contractors operating within Nigeria's upstream oil and gas sector.
Federal Government Of
Nigeria Introduces Cost Efficiency Incentive Framework For Upstream
Operators
Issue 6.2 | June 2025
The opinion expressed in this article is solely personal and does not represent the views of any organization or association to which the authors belong.
