The Petroleum Technology Association of Nigeria has warned that Nigeria may miss its target of producing three million barrels of oil per day by 2030 due to inadequate equipment, funding constraints and a shortage of experienced personnel in the oil and gas industry.
The Chairman of PETAN, Wole Ogunsanya, said the country needs about $6bn worth of equipment and hardware to raise oil production to the targeted level, adding that existing infrastructure is insufficient to support the planned increase.
He spoke in Lagos on Monday during a briefing on the state of Nigeria’s oil and gas industry on Monday, where he identified gaps in oilfield equipment, pipelines and skilled manpower as major obstacles to achieving the production target.
Ogunsanya said Nigeria currently produces about 1.7 million barrels of oil daily, while expanding refining capacity increases the need to raise crude oil production.
He also pointed to the planned expansion of the Dangote Petroleum Refinery, BUA Group’s proposed 350,000-barrel-per-day refinery and the need to rehabilitate the Nigerian National Petroleum Company Limited’s refineries as developments likely to drive up crude oil demand.
He said the country’s potential refining capacity could reach about three million barrels per day if the planned projects and rehabilitation of existing facilities are realised.
Ogunsanya warned that Nigeria had never produced more than 2.6 million barrels per day, highlighting the scale of the infrastructure gap facing the industry.
“Today, we are producing about 1.7 million barrels of oil. We have a refinery at Dangote with a capacity of 650,000 barrels. Today, we have NNPC’s aggregate refineries in Kaduna, in Warri, and Port Harcourt, what I call a capacity of about 450,000 barrels refining. Today we have a 350,000-barrel refinery being built by BUA Group, and today we understand Dangote is planning to raise his refinery to about 1.4 million barrels of oil per day. So, if you aggregate all of this, you are looking at the potential of about 3 million barrels of refining capacity in the country.
“If you do the maths correctly: we’re producing 1.7mbpd; we have a refining capacity of 3 million barrels potential; and OPEC allows us to sell 1.5 million barrels of oil. So when you add the numbers up, we need over four million barrels of oil production in Nigeria. We’ve never produced more than 2.6 million barrels in this country. And that’s very important.
“It means that the wells, the surface equipment, the midstream pipelines that will take those productions to wherever we want to take them, we don’t have them. We’ve never reached that capacity in the country,” he added.
Ogunsanya added that the country lacks sufficient wells, surface equipment and midstream pipelines to support the production capacity required to meet its long-term ambitions.
He maintained PETAN sees the equipment gap as an investment opportunity for indigenous oilfield service companies, but warned that limited access to finance continues to hinder their ability to acquire expensive machinery.
According to him, a land drilling rig can cost between $30m and $40m, while a swamp rig costs between $160m and $170m. A jack-up rig, he added, can cost between $300m and $400m, depending on its specifications.
The PETAN chairman said the industry needs innovative financing arrangements to enable local service companies to acquire equipment without relying solely on conventional bank loans that require substantial collateral.
Ogunsanya called on the Nigerian Content Development and Monitoring Board to direct more resources from the Nigerian Content Development Fund towards oilfield equipment.
Beyond funding, he identified a shortage of experienced professionals as another challenge, warning that the divestment of onshore and shallow-water assets by international oil companies creates a need for indigenous operators to take greater responsibility for training young Nigerians.
He said multinational oil companies had historically trained many of the country’s experienced oil and gas professionals through international assignments and specialised programmes.
However, as the assets change hands, he noted, indigenous operators need to establish training programmes to develop the next generation of engineers and technical workers.
“So, you can see clearly that there is a huge gap between training new Nigerians today coming into the industry versus those that are 50, 60 years old that have been trained largely by the multinational companies,” he said.
Ogunsanya urged indigenous exploration and production companies to invest in training to ensure that the country has enough skilled workers to operate its oil and gas assets.
Ogunsanya maintained that Nigeria can achieve its production ambitions if the government and industry operators address funding, infrastructure and skills constraints while sustaining investment regardless of fluctuations in international crude oil prices.
He argued that the growing domestic refining industry provides an incentive to maintain production even when crude prices fall, as refineries continue to require feedstock and refined products can be sold in domestic and international markets.
“We’re not going to stop drilling when the oil price goes down because we need to feed our refineries,” he said.
Ogunsanya called for strategic planning and stronger leadership to ensure that the country’s oil and gas resources translate into higher production, increased local capacity and sustainable economic growth.