Mkpoikana Udoma
Port Harcourt — Nigeria offers the lowest oilfield service costs in Africa, but persistent evacuation and security challenges continue to distort perceptions of high production expenses, the Petroleum Technology Association of Nigeria, PETAN, has declared.
Speaking at a Townhall Session during the 14th Practical Nigerian Content, PNC, Conference in Yenagoa, PETAN President, Engr. Wole Ogunsanya, said Nigeria’s true cost profile is misunderstood because critics fail to differentiate capital expenditure, CAPEX, from operating expenditure, OPEX.
“Nigeria’s CAPEX is among the lowest in Africa. That fact is not debatable,” Ogunsanya stated. “What drives up our OPEX is not production—it is evacuation, security and the activities of portfolio companies who manipulate the system.”
Ogunsanya explained that while many African countries pay exorbitantly for drilling, Nigeria remains significantly cheaper.
“A land rig in India goes for $60,000 a day. In Nigeria, it can be as low as $30,000. That is the strength of local content; it subsidises production in ways analysts don’t always see,” he said.
According to him, the number one cost driver remains the unsafe and unreliable evacuation channels.
“Pipelines are vandalised, so companies resort to vessels and barges at $12 per barrel. Add security escorts and guards, and the bill grows fast. That is the real problem, not CAPEX,” he said.
On cost manipulation by non-operational portfolio companies, he warned that they have become a dangerous inflation point in the system.
“Some portfolio companies obtained NCEC, got on NIPEX, and took jobs they had no capacity for. These players worsen cost inefficiencies and distort the market,” he said.
Ogunsanya urged the Nigerian Content Development and Monitoring Board, NCDMB to allow PETAN specialists to help define and verify equipment standards across the industry.
“We want the Federal Government and NNPCL to empower PETAN to benchmark global project costs. When an IOC claims a US$5 billion project will yield 100,000 barrels, we can verify with real data,” he said.
The session, moderated by NCDMB’s GM Corporate Communications, Dr. Obinna Ezeobi, also reviewed bottlenecks around the Nigerian Content Equipment Certificate, NCEC, and funding access for startups.
NCDMB’s Director of Capacity Building, Engr. Abayomi Bamidele, clarified that the Board has developed new “Guidance Notes” to help companies apply correctly.
“You cannot register for all categories. Choose only the areas where you have real assets and real competence,” he advised.
On funding, NCDMB Director of Finance & Personnel, Mr. Uchendu Ossaowa, stressed that Research & Development firms cannot borrow from the US$400m Nigerian Content Intervention Fund.
“The fund is strictly for contributors and companies with active oil and gas contracts,” he noted.
However, firms conducting R&D can access the $50m Nigerian Content R&D Fund, according to NCDMB’s Director of Corporate Services, Dr. Abdulmalik Halilu.
“We also run hackathons that support indigenous innovators. R&D companies are encouraged to participate,” he affirmed.
The conference ended with a facility tour showcasing indigenous capacity in electrical and related oilfield services.
