Nigeria offers the lowest service costs in Africa’s oil and gas sector, the President of the Petroleum Technology Association of Nigeria (PETAN), Engr Wole Ogunsanya, said on Wednesday, as he urged policymakers to separate capital expenditure from operating costs in assessing the industry’s competitiveness.
Speaking at a townhall session during the 14th Practical Nigerian Content (PNC) Conference and Exhibition in Yenagoa, Ogunsanya presented PETAN’s comparative analysis of project pricing across African and international markets.
He argued that Nigeria’s capital expenditure rates remain “arguably the lowest on the continent,” despite claims that the cost of producing crude in the country is uncompetitive.
According to him, the perception of high costs is largely driven by operational challenges rather than service pricing.
“The number one cost driver in Nigeria’s oil and gas industry operations is evacuation of crude oil and gas. Our pipelines are vandalised, and some companies use vessels and barges to move crude at about US$12 per barrel,” he said, stressing that security expenses and escort payments further inflate operating costs.
Ogunsanya, who also heads Geoplex Drillteq Limited, contrasted Nigeria’s service rates with those of other markets. He said land rig contracts that cost around US$60,000 per day in India can be secured for nearly half the price in Nigeria. Local content policy, he added, acts as a form of subsidy by deepening indigenous participation and driving down service rates.
He warned, however, that portfolio companies lacking technical assets continue to distort the market and escalate costs, insisting that such firms had obtained Nigerian Content Equipment Certificates (NCEC), gained registration on NIPEX and secured projects without the capacity to execute them.
The Presidential Directive on Local Content Compliance issued in March 2024 seeks to address this by barring such companies from project bids unless they demonstrate genuine operational capability, he added.
Ogunsanya urged the Nigerian Content Development and Monitoring Board (NCDMB) to allow PETAN specialists to advise on equipment standards for industry operations, and asked the Federal Government and the NNPCL to support efforts to benchmark project costs across global markets. Such data, he said, would help ensure transparency when operators present multi-billion-dollar project valuations.
Wednesday’s session, moderated by NCDMB’s General Manager, Corporate Communications Division, Dr Obinna Ezeobi, also reviewed requirements for obtaining the NCEC and discussed the scope of financing available from the Nigerian Content Intervention Fund (NCIF).
Director of Capacity Building at NCDMB, Engr Abayomi Bamidele, said new “Guidance Notes” outlining mandatory documentation for NCEC applications are now available.
Bamidele advised companies to apply only for categories aligned with their proven assets, rather than attempting broad registration. He and Dr Ezeobi added that a complaints platform for NCEC-related issues will soon be opened.
On financing, the Director of Finance and Personnel, Mr Uchendu Ossaowa, clarified that the NCIF, valued at US$400 million, is not accessible for research and development activities, as it is reserved for contributors and firms with active oil and gas contracts.
Instead, R&D-focused companies may apply to the separate US$50 million Nigerian Content Research and Development Fund, according to NCDMB Director of Corporate Services, Dr Abdulmalik Halilu, saying that innovation-focused firms can also benefit from NCDMB hackathons and similar initiatives.
The 14th PNC Conference concluded on Thursday with a technical site visit to an oil and gas facility specialising in electrical systems and related services.
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