Nigeria offers Africa’s lowest Oil and Gas service costs – PETAN President
The President of the Petroleum Technology Association of Nigeria (PETAN), Engr. Wole Ogunsanya, has declared that the cost of oil and gas services in Nigeria remains the lowest in Africa, contrary to perceptions that the country is uncompetitive in production expenses.
Speaking on Wednesday during a Townhall Session at the 14th Practical Nigerian Content (PNC) Conference and Exhibition held at their Nigerian Content Tower (NCT) in Yenagoa, Ogunsanya presented comparative data showing that Nigeria’s capital expenditure (CAPEX) for oil and gas operations is significantly cheaper than in several African and global markets.
He clarified that debates around Nigeria’s high cost of production often fail to distinguish between CAPEX and operating expenditure (OPEX). According to him, while production challenges persist, Nigeria’s CAPEX remains highly competitive.
“The number one cost driver in Nigeria’s oil and gas operations is crude oil and gas evacuation,” he said. “Due to pipeline vandalism, some companies resort to vessels and barges at costs as high as $12 per barrel, in addition to security fees for escorts and guards.”
Ogunsanya, who is also the Chairman/CEO of Geoplex Drillteq Limited, noted that local content implementation has been a major factor in keeping service costs relatively low. He cited examples such as land rig hiring rates—around $30,000 per day in Nigeria compared to up to $60,000 per day in India.
However, he raised concerns over the activities of portfolio companies that inflate industry costs.
He said such companies often obtain the Nigerian Content Equipment Certificate (NCEC) without owning the requisite operational assets, enabling them to secure projects on NIPEX.
He emphasized that the Presidential Directive on Local Content Compliance Requirements, issued on March 24, 2024, mandates that such companies be excluded from participating in the sector unless they demonstrate verifiable capacity.
The PETAN President urged the Nigerian Content Development and Monitoring Board (NCDMB) to allow industry experts from PETAN to support the classification of essential equipment and guide project evaluations.
He also called on the Federal Government and NNPCL to assist PETAN in benchmarking project costs across global markets, enabling better comparisons and preventing inflated budgets.
During the Townhall Session moderated by NCDMB’s General Manager, Corporate Communications, Dr. Obinna Ezeobi, discussions touched on NCEC requirements and access to the Board’s funding schemes.
Director of Capacity Building at NCDMB, Engr. Abayomi Bamidele, explained that the Board had developed “Guidance Notes” to help applicants understand mandatory documentation. He cautioned companies to register for only categories where they possess verifiable assets rather than attempting to cover all eight NCEC categories.
He announced that NCDMB would soon open a platform for complaints related to NCEC applications.
On funding opportunities, NCDMB’s Director of Finance and Personnel, Mr. Uchendu Ossaowa, explained that Research and Development (R&D) firms are not eligible for the US$400 million Nigerian Content Intervention Fund (NCI Fund), as it is restricted to contributors and companies with ongoing contracts.
However, the Director, Corporate Services, Dr. Abdulmalik Halilu, clarified that R&D-focused companies could access the US$50 million Nigerian Content Research and Development Fund and participate in NCDMB-sponsored innovation hackathons.
The 14th PNC Conference and Exhibition concluded on Thursday with a technical site visit by delegates to an oil and gas facility specializing in electrical services and related solutions.