PETAN members raised the concerns 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.”
Speaking on the execution capacity of indigenous service providers, PETAN Publicity Secretary, Dr Joan Faluyi, argued that claims about local companies lacking the capacity to deliver projects often overlook the financial and procurement challenges they face.
According to Faluyi, one of the industry’s major problems is the time it takes for tenders to be approved, contracts awarded and equipment mobilised. She said prolonged processes can leave companies working with prices that no longer reflect prevailing market conditions.
She explained that foreign exchange movements, rising equipment costs and geopolitical developments can make bids submitted several years earlier financially unworkable by the time contractors are ready to begin operations.
Faluyi also highlighted the difficulty of obtaining affordable financing from local banks, noting that lenders may be unwilling to finance the full duration of long-term projects. This, she said, places additional pressure on contractors who are expected to deliver services at narrow profit margins.
“Our banks’ interest rates is double digit. You have a project that is five years, and they’re willing to finance one year,” she said, explaining that financing costs continue to accumulate while contractors wait for approvals, mobilisation and payment.
She further complained that some producers impose strict profit margins on service companies, even when contractors face substantial expenses importing equipment, transporting rigs and meeting operational requirements.
Faluyi said payment delays of up to 90 days after completing work could further weaken contractors’ financial positions, leaving them struggling to cover loans and other project costs.
She called for faster tender processing and better coordination between contract timelines and financing arrangements. According to her, indigenous companies are capable of delivering projects but need a more predictable commercial environment to operate effectively.
The concerns raise questions about the implementation of the presidential directives introduced in 2024. The Federal Government announced measures to compress oil and gas contracting cycles to six months, while the Nigerian Content Development and Monitoring Board (NCDMB) subsequently reported progress in reducing approval timelines.
However, PETAN’s complaints suggest that some service providers continue to experience delays and financial constraints. The extent to which these challenges affect different contracts and operators was not independently established in the report.
At the workshop, Energia Limited Chairman, George Osahon, stressed that service companies remain essential to the oil and gas industry because they provide the technology and specialised expertise required for exploration and production.
Osahon said operators must also ensure that contractors possess the technical competence and financial strength to execute projects. Poor performance, he warned, can increase drilling time, raise costs and contribute to production losses.
He cited cases where wells expected to take between 25 and 30 days reportedly required as long as 60 days to complete. He contrasted this with earlier periods when some development wells were drilled much faster, attributing the difference partly to declining technical competencies and reduced opportunities for industry training.
Osahon identified the loss of training platforms, including Shell’s Intership Training Programme, as one of the factors that may have weakened skills development across the sector. He called attention to the need for sustained investment in workforce training and technical capacity.
He also acknowledged that payment delays can arise during industry downturns, when falling crude prices and financial pressure affect operators’ ability to meet their obligations. He noted that service providers often bear the consequences of these disruptions.
According to Osahon, the sector has shown signs of recovery, with Nigeria’s rig count reportedly doubling over the preceding two years.
On regulation and technology, he said Nigeria still had room to improve its monitoring capabilities, pointing to advanced drilling-control systems used by Saudi Aramco as an example of how technology can support operational oversight and efficiency.
Delivering a keynote address on behalf of Renaissance Africa Energy Company Limited Managing Director, Tony Attah, the company’s Vice President of Exploration, Dr Johnbosco Uche, said energy security should be measured not only by the resources available underground but also by the value the country creates from them.
Uche stressed the importance of maintaining a continuous cycle of exploration, development and production, explaining that exploration helps replenish reserves while development and production meet current energy needs.
He said Renaissance was adopting an approach focused on safely managing and growing its assets, including Infrastructure-Led Exploration and Near-Field Exploration, to reduce the time between identifying resources and bringing them into production.
Uche also emphasised the importance of speed in project delivery, arguing that resources brought into production too late may fail to address immediate energy needs. He described natural gas as a major opportunity for Nigeria’s industrialisation and said people, skills and innovation would remain critical to the industry’s progress.
The concerns raised by PETAN underline the importance of addressing financing constraints, contract administration and technical capacity if Nigeria is to expand upstream investment, improve production and strengthen the role of indigenous companies in the oil and gas value chain.
Reporting by TalkNaijaMedia
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