The Petroleum Technology Association of Nigeria (PETAN) has expressed concern that prolonged contract approval processes, delayed payments and high borrowing costs continue to hamper oil and gas projects despite presidential directives intended to accelerate investment and execution.
The association said its members had yet to experience meaningful improvements in tender processing and payment timelines, raising questions about the implementation of President Bola Tinubu’s March 2024 directives on local content and oil and gas contracting.
Speaking at a pre-conference workshop organised by the Nigerian Association of Petroleum Explorationists (NAPE), PETAN’s Publicity Secretary, Dr Joan Faluyi, said these persistent bottlenecks were weakening indigenous service companies and slowing upstream activity.
The workshop, themed “Navigating Nigeria’s Upstream Future: Exploration and Development Approaches vs. Energy Security Demand,” examined the relationship between project delivery, production growth and national energy needs.
Faluyi challenged claims that Nigerian service providers lacked capacity, arguing that such assessments often overlooked the financial and procurement conditions under which they operated.
She identified lengthy contracting **cycle times** as a major obstacle, explaining that tender approvals, contract awards and mobilisation could take years, leaving companies unable to execute work at their original prices.
According to her, a quotation submitted four years earlier could become commercially unviable because of exchange-rate movements, rising equipment costs and geopolitical disruptions before work begins.
She said these delays undermined the objectives of the presidential directives, which were designed to shorten contracting timelines, fast-track approvals, encourage investment and increase production.
Faluyi also highlighted the mismatch between project duration and available financing, noting that local banks often offered short-term loans at double-digit interest rates for projects requiring several years to complete.
“Our banks’ interest rates is double digit. You have a project that is five years, and they’re willing to finance one year. And these producers want you to deliver whatever service at a very small margin,” she said.
She explained that contractors could begin accumulating interest charges while importing equipment, continue paying financing costs during mobilisation and then wait another 90 days for payment after delivering services.
In some cases, she said, producers prescribed margins as low as nine per cent, leaving contractors with little room to absorb financing expenses and other cost increases.
Faluyi maintained that these pressures could undermine service delivery, after which affected companies were labelled as lacking capacity.
She called for faster bid processing, more predictable payment arrangements and financing structures aligned with project timelines.
According to her, Nigerian service companies securing contracts outside Africa often benefited from shorter procurement cycles, enabling them to mobilise and deliver more quickly.
Also speaking, the Chairman of Energia Limited, Mr George Osahon, said service providers remained indispensable because they supplied much of the technology required for oil and gas operations.
He recalled that Shell’s operating model discouraged operators from owning rigs, helping to avoid conflicts of interest and operational inefficiencies.
However, Osahon said operators also had a responsibility to ensure contractors possessed the technical competence and financial strength to execute projects without causing production delays or accumulating debt.
He cited instances where wells expected to take between 25 and 30 days to complete extended to 60 days, contrasting that performance with earlier periods when ExxonMobil drilled development wells in 10 days.
Osahon attributed part of the deterioration to declining competencies and reduced investment in industry-wide training. He pointed to programmes such as Shell’s SITP as examples of initiatives that had previously helped develop technical skills across the sector.
He acknowledged that service companies often bore the greatest burden during industry downturns, explaining that falling oil prices could leave operators struggling with debt and unable to pay contractors promptly.
Such payment difficulties, he said, were sometimes a consequence of the industry’s volatile financial conditions rather than deliberate attempts to undermine service providers.
Nevertheless, Osahon noted signs of recovery, saying Nigeria’s rig count had doubled over the past two years.
He also called for stronger regulatory monitoring and greater use of real-time technology, contrasting Nigeria’s monitoring arrangements with Saudi Aramco’s drilling control rooms, where operations could be tracked and drill bits steered remotely.
Delivering the keynote address on behalf of Renaissance Africa Energy Company Limited’s Managing Director, Tony Attah, the company’s Vice President, Exploration, Dr Johnbosco Uche, said energy security should be measured by the value created from resources rather than the volume remaining underground.
He stressed that Nigeria needed a continuous cycle of discovery, development and production to replenish reserves while meeting current energy demand.
Uche said Renaissance regarded itself as an energy security company, with a strategy centred on safely taking over assets, stabilising operations and growing production.
The company, he added, was pursuing infrastructure-led and near-field exploration to shorten the journey from identifying prospects to bringing them into production.
“Pace matters. A resource that arrives too late cannot solve today’s energy challenge,” he said.
He described natural gas as a powerful instrument for Nigeria’s industrialisation and economic transformation, while stressing that skilled people and innovation would be as important as technology in achieving those goals.