Indigenous oil and gas service companies have expressed concern over lengthy contract approval processes, delayed payments and high borrowing costs, warning that the challenges are slowing upstream projects and weakening local capacity in Nigeria’s petroleum industry.
The companies, operating under the Petroleum Technology Association of Nigeria (PETAN), said the delays undermine President Bola Tinubu’s presidential directives on local content introduced in March 2024, which were designed to accelerate contracting procedures, attract investment and increase crude oil production.
The concerns were raised in Lagos during a pre-conference workshop organised by the Nigerian Association of Petroleum Explorationists (NAPE), themed Navigating Nigeria’s Upstream Future: Exploration and Development Approaches vs. Energy Security Demand.
PETAN’s Publicity Secretary, Dr Joan Faluyi, said the challenges facing indigenous service providers went beyond questions about their technical capabilities, pointing instead to procurement delays and difficult financing conditions.
According to Faluyi, tender approvals, contract awards and mobilisation can take years, leaving companies struggling with cost increases and changing economic conditions before projects even begin.
She explained that local banks charge double-digit interest rates but may be unwilling to finance projects for their full duration. Meanwhile, oil producers expect contractors to deliver services at narrow profit margins and may delay payments for up to 90 days.
Faluyi warned that contracts priced several years earlier could become financially unviable by the time companies receive approval to commence work, particularly following foreign exchange fluctuations, rising costs and geopolitical disruptions.
She called for faster tender processing and better coordination between contract timelines and financing arrangements, noting that Nigerian service companies often execute projects more quickly when working outside Africa.
The concerns have also raised questions about the implementation of the 2024 directives by the Nigerian Content Development and Monitoring Board (NCDMB). The board had yet to respond to the concerns at the time the report was published.
Meanwhile, Chairman of Energia Limited, George Osahon, acknowledged the importance of service providers to the oil and gas industry, particularly their technical expertise and equipment.
However, he also pointed to declining industry competencies and reduced opportunities for technical training as factors affecting operational performance. He cited instances where wells expected to take between 25 and 30 days to complete reportedly required as long as 60 days.
Osahon noted that conditions were gradually improving, with the number of active rigs doubling over the previous two years. He nevertheless called attention to gaps in Nigeria’s regulatory monitoring and technological capabilities.
In his contribution, Renaissance Africa Energy Company Limited’s Vice-President of Exploration, Dr Johnbosco Uche, stressed that Nigeria’s energy security depended not only on its natural resources but also on its ability to convert them into economic value.
Uche advocated sustained investment in exploration, development and production, highlighting the role of gas in supporting industrialisation and economic transformation.
He also emphasised the need to reduce the time between discovering petroleum resources and bringing them into production, arguing that delays could prevent the country from meeting its energy needs.
The industry’s concerns underline the importance of efficient contracting, accessible financing and stronger technical capacity as Nigeria seeks to increase petroleum production and expand opportunities for indigenous companies.
