He said the step is being taken as part of efforts to sanitise Nigeria's oil industry which is said to be plagued by corruption, massive fraud, and crude oil theft.
"I will remain Minister of Petroleum.
"I will appoint a minister of State for Petroleum".
Buhari restated his determination to sanitise Nigeria's oil industry and free it from corruption and create more transparency.
He said that his first step in sanitizing the petroleum sector has already begun with the appointment of a new management for the NNPC and said that the prosecution of those who misappropriated NNPC's funds is already in the works.
Buhari, who took office at the end of May promising to fight corruption, has made it clear he wants to overhaul the oil sector in Africa's biggest economy, which provides the government with about 70% of its revenue.