• Says weak project pipeline, capacity redundancy, funding gaps challenge targets

Despite commitments by major international oil companies to invest an estimated $45 billion in Nigeria’s upstream petroleum sector, low oilfield activity and underutilisation of existing industry capacity continue to threaten the Federal Government’s ambitious crude oil production targets.

The President of Petroleum Technology Association of Nigeria (PETAN), Engr. Wole Ogunsanya, declared in Abuja on Monday that whereas Nigeria possesses sufficient indigenous technical capacity, equipment and service capabilities to support crude oil production of up to 3.0 million barrels per day (bpd), inadequate oilfield activity, a weak project pipeline and limited investment deployment are preventing the country from fully realising its production potential.

The warning comes despite separate deepwater development programmes announced by Shell and ExxonMobil, with cumulative investment commitments estimated at about $45 billion.

Industry analysts have described the planned projects as critical catalysts expected to revive oilfield activities and drive Nigeria’s quest to raise crude oil production to 2 million bpd by 2027 and 3 million bpd by 2030.

Government had set ambitious production targets for the industry as it grapples with difficult economic recovery programmes to counter runaway inflation, sprawling poverty and free fall of the Naira at the foreign exchange market. And the petroleum industry investments, activities, production and exports account for over 90 percent success factor in the government’s overall economic reforms efforts.

Speaking on Monday at the Nigerian Content Seminar, held on the sidelines of the ongoing Nigerian Oil and Gas (NOG) Energy Week in Abuja, Ogunsanya said Nigeria’s upstream industry continues to suffer significant capacity redundancy at a time when government is aggressively pursuing higher production.

He spoke during a strategic panel session themed “Nigerian Content as an Investment Enabler.”

According to him, years of investment in local content development have created substantial indigenous capacity across drilling operations, fabrication yards, engineering services and oilfield supply chains, but much of those assets remain idle because of declining project activity.

“We have adequate equipment and in-country capacity to achieve up to 3 million barrels per day production. The challenge is how to fully utilise this capacity. Without increased drilling and investment, those targets may remain out of reach,” he said.

Ogunsanya stressed that achieving Nigeria’s production aspirations would depend largely on significantly increasing drilling activities across onshore, shallow water and offshore assets while ensuring sustained capital inflows into upstream development projects.

He observed that although Nigeria’s downstream refining landscape has expanded considerably—with the commencement of operations at the Dangote Refinery, the rehabilitation of the Port Harcourt, Warri and Kaduna refineries, alongside several proposed refinery projects—the upstream sector has failed to expand at a corresponding pace.

According to him, the imbalance between refining capacity and crude production poses a major challenge for the country’s energy security and long-term growth objectives.

The PETAN President attributed the slow pace of upstream investment partly to operational inefficiencies and production losses, disclosing that some operators lose as much as 70 per cent of production, a development that weakens investor confidence and discourages fresh capital deployment.

“This is at the core of the industry’s challenge. Investors will be reluctant to commit funds where production losses are significant. We must address these structural issues to unlock growth,” he said.

On financing, Ogunsanya described access to capital as one of the most critical requirements for expanding oil production, calling for more targeted funding mechanisms to support field development, acquisition of equipment and execution of upstream projects.

He disclosed that indigenous service companies have benefited from more than $20 billion in local content financing initiatives facilitated by the Nigerian Content Development and Monitoring Board (NCDMB), which have supported investments in drilling services, fabrication facilities and broader oilfield supply chain development.

According to him, the interventions have significantly strengthened indigenous participation and helped retain industry value within Nigeria.

“These interventions have helped retain capital within the country and strengthened indigenous capacity. However, we need more dedicated funding for critical equipment and, more importantly, projects that will utilise these assets effectively,” he said.

Ogunsanya also acknowledged the growing role of Nigerian financial institutions in supporting upstream investments, noting that several international oil companies are increasingly engaging local banks to finance contractors executing oil and gas projects.

He maintained that expanding the industry’s project pipeline remains the most effective way to improve equipment utilisation, deepen local content and build globally competitive indigenous service companies.

“We need more projects. When projects increase, equipment utilisation improves, and indigenous companies can scale their capabilities. That is how we build a sustainable industry,” he said.

Reaffirming PETAN’s commitment to supporting the industry’s growth agenda, Ogunsanya assured international oil companies and other operators that Nigerian oilfield service companies possess the technical competence, equipment and manpower required to deliver complex projects efficiently.

He expressed confidence that Nigeria can achieve both its medium- and long-term crude oil production targets and strengthen its competitiveness in the regional and global petroleum market, provided the government addresses the structural constraints limiting investment flows, accelerates drilling programmes and creates conditions that encourage sustained upstream project execution.