Nigeria is witnessing positive growth in local oil production capacity as the country’s energy landscape continues to react to fiscal policy changes.
In a bold move to revamp Nigeria’s oil and gas sector, President Bola Tinubu has sustained policy changes leading new executive orders.
The latest of the interventions aims at cutting upstream operational costs, attracting fresh investment, and maximizing revenue from every barrel of oil.
Titled: “The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025),” the directive introduces performance-based tax incentives for oil and gas operators that achieve verifiable cost reductions aligned with annual industry benchmarks.
According to the Order, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) will publish these cost benchmarks annually based on operational terrain—onshore, shallow water, and deep offshore. Detailed implementation guidelines are expected to follow shortly.
Under the new regime, operators who achieve cost savings will be entitled to retain 50 per cent of the incremental government revenue generated by those efficiencies.
However, tax credits available under the incentive are capped at 20 per cent of a company’s annual tax liability—ensuring a balance between fiscal prudence and investor reward.
“This order is a signal to the world: we are building an oil and gas sector that is efficient, competitive, and works for all Nigerians. It is about securing our future, creating jobs, and making every barrel count,” Tinubu said.
To ensure coordination and accountability, the president has tasked the Special Adviser on Energy to lead inter-agency implementation efforts across government, translating the order’s intent into measurable outcomes.
Mrs. Olu Verheijen, Special Adviser to the President on Energy, emphasised that: “This is not just about cost-cutting, it is a strategic step to reposition Nigeria’s upstream sector as globally competitive and fiscally resilient. We are rewarding efficiency, reinforcing investor confidence, and delivering greater value to Nigerians.”
The new order complements the administration’s broader 2024 reforms, which improved fiscal terms, streamlined project approvals, and aligned local content frameworks with global best practices.
No doubt, Tinubu’s policies as Nigerian president have drawn praise from investors, the World Bank and the International Monetary Fund.
For households facing a cost-of-living crisis, the picture isn’t so rosy.
Tough-love economic reforms — including the end to a costly fuel subsidy on his first day in office two years ago are indeed beginning to yield results.
Tax collection has improved, a more transparent foreign-exchange system has almost eliminated the gap between the official and street rates, and the naira is relatively stable.
Addressing Weak Local Capacity
Local oil companies are now scaling up their production capacity as they now account for more than 50 per cent of the country’s crude oil production.
This represents a sharp increase of over 10 per cent from about 40 per cent, the share they held before international oil majors began pulling out of onshore and shallow water operations according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
This marks a significant shift in Nigeria’s energy landscape and positions indigenous firms as key players in the federal government’s ambition to raise daily crude oil output by an additional one million barrels next year.
The NUPRC in a report said, “Local oil firms now account for over half of Nigeria’s oil production from around 40 per cent before the oil majors completed their divestment programmes, according to the regulator’s data.
“These local players signal a new phase for Nigeria’s oil and gas sector and could provide support for the government’s plan to raise oil output by an additional one million barrels per day next year, the regulator said.”
The rise of these indigenous operators follows a wave of divestments by international oil companies such as Shell, ExxonMobil, ENI, and TotalEnergies, which have sold off onshore and shallow-water assets to focus on deepwater operations.
In their place, Nigerian-owned firms are stepping up with aggressive investment plans and field development strategies.
One such milestone was recorded recently when Green Energy International Limited commenced loading operations at Nigeria’s first fully indigenous onshore crude export terminal, Otakikpo.
The 360,000 barrels-per-day terminal, located in OML 11 near Port Harcourt, handled its first crude cargo loaded by Shell’s trading arm. The facility is expected to unlock stranded reserves in over 40 marginal fields across the region and boost crude evacuation from the Niger Delta.
In a similar circumstance, Conoil Producing Limited recently exported the maiden cargo of its new Obodo crude blend from the OML 150 licence area.
The cargo was lifted by Oando Trading, a subsidiary of Oando Plc, which acquired ENI’s divested Nigerian assets as part of its upstream expansion.
Another major player, Renaissance Africa Energy, the consortium that acquired Shell’s onshore assets, has pledged to invest $15billion over the next five years.
The company aims to scale up crude production and double its gas output once a major domestic pipeline currently under construction is completed.
On its part, Seplat Energy, which is finalising the acquisition of ExxonMobil’s shallow-water assets, has unveiled plans to reopen over 400 shut-in wells.
Speaking at the company’s recent annual general meeting, CEO Roger Brown said Seplat would invest up to $320million this year in new drilling campaigns and infrastructure upgrades, with a target to raise output to 140,000 barrels per day.
“We are focused on reviving existing wells, expanding drilling campaigns, and increasing gas volumes,” Brown said.
Meanwhile, Renaissance Africa Energy Company Limited (RAEC) has formally informed the Federal Government of its recent acquisition and operational takeover of Shell Petroleum Development Company’s (SPDC) onshore assets in Nigeria.
A delegation from RAEC led by Dr. Layi Fatona, Chairman of RAEC, alongside Engr. Tony Attah, the company’s Managing Director and Chief Executive Officer stated this during a courtesy visit to the minister of finance and coordinating minister of the economy, Mr. Wale Edun, at his office in Abuja, as part of ongoing engagement with strategic indigenous players in Nigeria’s energy sector.
During the meeting, the RAEC leadership shared key updates, highlighting that since assuming control of the assets, the company has ramped up production to over 200,000 barrels per day—a major milestone for both RAEC and the broader Nigerian oil and gas industry.
Dr. Fatona and Engr. Attah reaffirmed RAEC’s full alignment with the federal government’s economic priorities, particularly in revenue generation, job creation, and upstream expansion. It also reiterated their long-term commitment to community engagement and responsible energy development.
In his remarks, Minister Edun warmly welcomed the delegation and applauded the operational strides made by RAEC.
He noted that the increasing participation of Nigerian-owned companies in key sectors reflects a broader shift toward homegrown solutions and inclusive economic growth.
The minister reiterated President Bola Tinubu’s commitment to fostering a level playing field for all private sector actors and stressed the importance of sustained collaboration between government and industry to deliver long-term value to the nation.
Manga noted that the meeting concluded with a shared understanding of the vital role indigenous firms like RAEC will play in Nigeria’s energy transition and macroeconomic advancement.
Endorsing Initiative
The African Centre for Energy Governance and Accountability, ACEGA, endorsed Tinubu’s various interventions in the sector.
The Centre described them as groundbreaking and well-coordinated reforms in Nigeria’s oil and gas regulatory framework.
The group said the Tinubu administration’s support for the effective implementation of the Petroleum Industry Act (PIA) and its deliberate push to increase crude oil production are signs of genuine transformation in the energy sector.
The centre’s executive director, Dr. Usman Bello Idris, said Tinubu’s approach to reform has restored investor confidence, revived production targets, and positioned Nigeria as a more responsible and efficient oil-producing nation.
“For years, Nigeria’s oil and gas sector groaned under inefficiency, uncertainty, and dwindling output. But what we are seeing today under President Tinubu’s leadership is a bold reset — one that respects the sanctity of the Petroleum Industry Act while pushing for real, measurable growth,” Dr. Idris said.
One of the most visible outcomes of the reforms, ACEGA said, is the steady increase in Nigeria’s crude oil production.
Since mid-2023, the country has seen a gradual climb in output levels, breaching 1.7 million barrels per day in recent months — a marked improvement from the lows of 2022 when output plunged below 1.2 million barrels due to theft, vandalism, and poor infrastructure.
Dr. Idris noted that this uptick did not happen by chance but was the result of deliberate interventions supported by Tinubu, including the relaunch of dormant assets, improved metering systems, and coordinated security efforts around critical pipelines.
“Nigeria’s crude oil production had been on life support, but through strategic regulatory leadership and presidential backing, the situation is reversing. Fields are coming back online, theft is being checked, and operators are regaining the confidence to produce,” he said.
ACEGA particularly hailed the president’s strong commitment to implementing the Petroleum Industry Act (PIA), signed into law in 2021.
The group noted that Tinubu’s government did not just inherit the legislation; it has gone further to empower the relevant agencies, notably the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to deliver on its promises.
“We must commend President Tinubu for not sidelining the PIA or paying lip service to its provisions. Instead, he has supported a robust implementation strategy that is already yielding results in licensing, fiscal discipline, community development, and investor clarity,” Dr. Idris stated.
The PIA, which took nearly two decades to become law, was designed to overhaul Nigeria’s oil and gas governance by introducing a transparent fiscal framework, separating regulatory responsibilities, and ensuring that host communities benefit from oil proceeds.
“From the Host Communities Development Trust to new fiscal incentives for marginal fields, and clearer guidelines for environmental compliance, the PIA under this administration is not just a document — it is a living, working tool of reform,” Idris added.
The group also applauded the leadership of Engr. Gbenga Komolafe at the NUPRC noting that his commitment to professionalism and transparency has contributed immensely to the success of the reforms.
It cited the commission’s efforts in reducing production costs, introducing real-time production monitoring, and facilitating a transparent bidding process for oil blocks as exemplary.
“The president has given NUPRC room to work, and they are proving that competent leadership can deliver results. NUPRC’s moves to enforce better metering, clamp down on theft, and promote decarbonisation reflect a forward-thinking agenda aligned with global standards,” ACEGA said.
While commending the gains so far, ACEGA urged the Tinubu administration not to rest on its laurels.
The group said there is a need for deeper investment in energy infrastructure, faster resolution of legacy disputes, and strategic planning for Nigeria’s energy transition in the face of global decarbonisation targets.
“The work is not done yet. Nigeria still faces challenges in refining capacity, gas monetisation, and energy access for its people. But what this administration has shown is that with political will, the sector can be revived. The future of oil and gas in Nigeria can be cleaner, more transparent, and more rewarding for all stakeholders,” Dr. Idris said.
ACEGA concluded by calling on stakeholders in the oil and gas industry — from international oil companies to local investors and host communities — to support the government’s reforms and work collectively to secure Nigeria’s energy future.
