By Ambrose Nnaji
The President of the Petroleum Technology Association of Nigeria (PETAN), Engr. Wole Ogunsanya, has stated that the cost of delivering technical services in Nigeria’s oil and gas industry remains the most competitive on the African continent.
Speaking at a town hall session during the 14th Practical Nigerian Content (PNC) Conference and Exhibition in Bayelsa State, Ogunsanya provided a comparative analysis of project costs across Africa and other oil-producing regions.
He stressed the need to distinguish between capital expenditure (CAPEX) and operating expenditure (OPEX) when evaluating Nigeria’s cost environment, noting that while the country’s CAPEX rates are among the lowest in Africa, high OPEX figures are largely driven by evacuation and security challenges.
According to him, PETAN has conducted long-term analyses of cost components across various markets using CAPEX and OPEX indicators. In Nigeria’s case, the most significant cost drivers are linked to crude and gas evacuation, pipeline vandalism, and the widespread use of barges and vessels — an alternative that can cost as much as US$12 per barrel. These additional costs often include payments to security personnel for escort services.
Ogunsanya, who is also Chairman/CEO of Geoplex Drillteq Limited, explained that despite these challenges, Nigeria still offers some of the lowest service rates in Africa. For instance, hiring a land rig in India costs around US$60,000 per day, compared to as low as US$30,000 in Nigeria. He attributed this partly to the country’s local content framework, which, in his words, “subsidises oil and gas production” even though the benefits are not always visible to market observers.
The PETAN President also warned about the distortive impact of “portfolio companies” — entities that lack the operational capacity to execute oilfield services but secure certifications and project approvals through questionable means. He revealed that some of these firms had previously obtained the Nigerian Content Equipment Certificate (NCEC), gained registration on the Nigerian Petroleum Exchange (NIPEX) and won service contracts despite lacking assets.
To address this, he referenced the Presidential Directive on Local Content Compliance Requirements, issued on March 24, 2024, which bars such portfolio companies from participating in the oil and gas industry. The directive also mandates that bidders demonstrate verifiable capacity before being cleared for project execution.
Ogunsanya urged the Nigerian Content Development and Monitoring Board (NCDMB) to allow PETAN specialists provide technical guidance on equipment requirements for industry operations. He added that support from the Federal Government and NNPC Ltd would help PETAN benchmark project costs in other markets, allowing Nigeria to verify cost claims made by international oil companies (IOCs) and indigenous operators.
At the town hall session moderated by the NCDMB’s General Manager, Corporate Communications Division (CCD), Obinna Ezeobi, participants also deliberated on requirements for obtaining the NCEC and the accessibility of the Nigerian Content Intervention Fund (NCIF).
Engr. Abayomi Bamidele, NCDMB’s Director of Capacity Building, disclosed that the Board has developed “Guidance Notes” outlining mandatory and category-specific documents required for the NCEC. He advised applicants to restrict their submissions to one or two NCEC categories in which they have proven capacity, rather than attempting to register for all eight categories.
Bamidele and Ezeobi further announced that the Board will soon open a dedicated platform for complaints and enquiries related to the NCEC process.
On financing, Uchendu Ossaowa, NCDMB’s Director of Finance and Personnel, clarified that Research and Development (R&D) companies cannot access the US$400 million Nigerian Content Intervention Fund, as it is reserved for contributors and firms with ongoing contracts with operating companies.
However, Abdulmalik Halilu, Director of Corporate Services, noted that R&D-focused firms can benefit from the US$50 million Nigerian Content Research and Development Fund, and can also participate in NCDMB-backed innovation hackathons designed to support indigenous technology development.
The 14th PNC Conference and Exhibition also featured a technical facility tour, where delegates visited an oil and gas service company specializing in electrical systems and integrated energy solutions.
