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Nigeria Needs $6bn in Equipment to Hit 3mbpd Oil Target, PETAN Warns
Nigeria Needs $6bn in Equipment to Hit 3mbpd Oil Target, PETAN Warns
Nigeria may miss its 3 million barrels per day production target by 2030 without $6bn in oilfield equipment, PETAN says.
Current production of about 1.7 million barrels per day falls short of the crude supply needed to support planned domestic refining capacity.
Funding constraints, inadequate pipelines and a shortage of experienced workers threaten the industry’s expansion.
October 29, () – Nigeria may fall short of its target of producing three million barrels of oil per day by 2030 unless it addresses a $6bn equipment gap, financing constraints and a shortage of experienced personnel, the Petroleum Technology Association of Nigeria has warned.
PETAN Chairman, Wole Ogunsanya, said the country lacked sufficient drilling equipment, production infrastructure and pipelines to support the increase in output, despite plans to expand domestic refining capacity.
He spoke in Lagos on Monday during a briefing on the state of Nigeria’s oil and gas industry, where he identified equipment shortages and limited access to finance as major constraints on production growth.
Nigeria currently produces about 1.7 million barrels of oil daily, according to Ogunsanya, while the country’s refining ambitions could push domestic crude demand significantly higher.
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Refining ambitions outpace crude production
Ogunsanya said Nigeria’s potential refining capacity could reach about three million barrels per day if planned projects and the rehabilitation of existing facilities are completed.
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The Dangote Petroleum Refinery currently has a stated capacity of 650,000 barrels per day, while the chairman put the combined capacity of the Nigerian National Petroleum Company Limited’s refineries in Kaduna, Warri and Port Harcourt at about 450,000 barrels per day.
He also cited BUA Group’s proposed 350,000-barrel-per-day refinery and plans to expand Dangote Refinery’s capacity to about 1.4 million barrels per day.
However, these figures represent a mix of existing capacity, proposed projects and planned expansions, rather than refining output currently available.
Ogunsanya argued that the scale of the proposed capacity underscores the need to increase crude production and invest in the infrastructure required to deliver oil to processing facilities.
“We’re producing about 1.7 million barrels of oil. We have a refinery at Dangote with a capacity of 650,000 barrels,” he said, adding that Nigeria had never produced more than 2.6 million barrels per day.
He also cited Nigeria’s Organisation of the Petroleum Exporting Countries allocation of about 1.5 million barrels per day, arguing that domestic refining demand and crude exports would require substantially higher production.
The comparison, however, involves different measures: refining capacity is not the same as actual crude consumption, while an OPEC production allocation is not necessarily a limit on the volume available for domestic refineries.
The eventual production requirement will depend on refinery utilisation, crude sourcing arrangements and the volume of oil Nigeria seeks to export.
PETAN Chairman Wole Ogunsanya Photo credit PETAN
Equipment costs and skills shortages
PETAN estimates that Nigeria needs about $6bn in oilfield equipment and hardware to support its production ambitions. The cost of individual assets illustrates the scale of the financing challenge facing indigenous oilfield service companies.
Ogunsanya said a land drilling rig could cost between $30m and $40m, while a swamp rig could cost between $160m and $170m.
A jack-up rig, he added, could cost between $300m and $400m, depending on its specifications.
He said conventional bank financing remained difficult for local service providers because acquiring expensive equipment often requires substantial collateral.
Ogunsanya urged the Nigerian Content Development and Monitoring Board to channel more resources from the Nigerian Content Development Fund towards oilfield equipment, while encouraging innovative financing arrangements that would enable indigenous companies to expand their capacity.
“The equipment deficit extends beyond drilling rigs to wells, surface production facilities and midstream pipelines needed to transport crude from producing fields to refineries and export terminals.
“A shortage of experienced personnel presents another challenge,” he stated
Ogunsanya said the transfer of onshore and shallow-water assets from international oil companies to indigenous operators had increased the responsibility on local firms to develop skilled workers.
“International oil companies historically trained Nigerian professionals through specialised programmes and overseas assignments.
“Indigenous operators must now invest more deliberately in training engineers and technical personnel to replace an ageing workforce and meet future operational demands,” he said.
He urged exploration and production companies to establish training programmes capable of developing the next generation of oil and gas professionals.
Ogunsanya maintained that Nigeria could still achieve its production ambitions if the government and operators addressed the funding, infrastructure and skills gaps.
He also argued that domestic refining provides an incentive to sustain drilling when international crude prices decline because refineries require a consistent supply of feedstock.
“We’re not going to stop drilling when the oil price goes down because we need to feed our refineries,” he said.
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