Nigeria needs an estimated $6 billion worth of drilling equipment and related infrastructure to raise crude oil production to three million barrels per day, the Petroleum Technology Association of Nigeria (PETAN) has said, warning that inadequate funding remains a major obstacle to achieving the country’s production target.
PETAN Chairman, Mr Wole Ogunsanya, disclosed this at the association’s media roundtable on the state of Nigeria’s oil and gas industry, where he called for innovative financing arrangements to enable indigenous oilfield service companies to acquire the equipment required to increase production.
Ogunsanya said Nigeria had the resources, market opportunities and indigenous technical expertise to expand oil and gas production, but lacked sufficient investment in the equipment and infrastructure needed to bridge the gap between existing output and the country’s ambitions.
He said the association’s assessment indicated that about $6 billion would be required for drilling equipment alone to support the drive towards three million barrels of crude oil per day.
According to him, the funding requirement presents both a challenge and an opportunity for Nigerian service companies, particularly as indigenous producers take over assets previously operated by international oil companies.
The PETAN chairman said conventional lending arrangements had made it difficult for many indigenous companies to acquire expensive drilling rigs and related equipment, despite their capacity to execute technically demanding oilfield operations.
To address the problem, he disclosed that an innovative $4.1 billion and N435 billion vendor financing scheme involving Renaissance Africa Energy and 13 commercial and multilateral financial institutions had been introduced to help indigenous service companies obtain funding for equipment and service contracts.
Under the arrangement, he explained, Renaissance would provide guarantees to participating banks for eligible contractors working for the company, enabling them to secure financing against contracted revenues rather than relying entirely on conventional collateral.
Ogunsanya said the model could help service companies obtain the equipment needed to execute contracts, while giving banks greater assurance that repayments would come from revenues generated by the work.
He urged other oil-producing companies operating in Nigeria to adopt similar arrangements, arguing that access to financing would enable indigenous contractors to expand their capacity, deliver more services and support higher crude oil production.
The PETAN chairman also called for greater use of the Nigerian Content Development and Monitoring Board(NCDMB), funding mechanisms to finance equipment acquisition by oilfield service companies, particularly where such investment could directly support additional production.
He said the ability of indigenous firms to finance and deploy drilling equipment would become increasingly important as Nigeria seeks to raise production from existing oilfields and develop additional reserves.
Ogunsanya noted that Nigeria had historically failed to sustain production growth during periods of favourable oil prices, partly because drilling and investment activity slowed when prices weakened.
He argued that the industry must adopt a more consistent investment strategy, rather than allowing oilfield development to fluctuate with short-term movements in crude prices.
According to him, domestic refineries and the continuing demand for petroleum products provide an additional incentive to sustain crude oil production, irrespective of temporary price declines.
He also stressed that Nigeria must increase exploration activity to replenish its reserves, warning that the country’s long-term production ambitions would be difficult to achieve without fresh discoveries and sustained drilling.
The PETAN chairman said the divestment of onshore and shallow-water assets by international oil companies had created opportunities for indigenous producers and service companies, with local firms increasingly demonstrating their ability to execute complex technical operations.
He cited the ability of Nigerian service companies to compete internationally as evidence that local capacity was no longer the principal limitation, pointing instead to financing, infrastructure and the need for sustained technical training.
Ogunsanya also raised concerns about a growing skills gap in the industry, warning that the transfer of assets to indigenous operators could weaken the traditional training pipeline previously supported by international oil companies.
He called on indigenous exploration and production companies to invest more deliberately in training young Nigerian engineers and technicians, saying the industry needed a new generation of skilled personnel to sustain operations as experienced workers approached retirement.
PETAN, he said, was pursuing training initiatives and plans for a first-class training centre in Rivers State to expand access to practical oilfield training and help prepare young Nigerians for employment in the industry.
He maintained that increasing investment in equipment, developing local skills and improving infrastructure would be critical to unlocking Nigeria’s oil and gas potential and delivering higher production, stronger industry revenues and more opportunities for indigenous companies.
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