West Africa is one of the most expensive regions in the world to drill, making it more challenging for African producers in Nigeria to compete globally, according to Deloitte’s 2025 West Africa Oil and Gas Outlook.
For instance, the elevated security risk in the Niger Delta means expatriate roles are more expensive to fill.
The report explained that these premiums add significantly to project costs, often without a corresponding return in productivity or efficiency.
“Local content rules, while necessary for domestic capacity-building, can further inflate costs when required inputs or services are not readily available in the domestic market. This creates tension between producers and governments, as the intention and the impact often result in duplicated spending. Typically, a projects first attempt is local sourcing, followed by repeat procurement offshore when delivery fails”.
“Alternatively, middlemen get invited through alliances to satisfy rigid local content requirements. In addressing these cost premium issues, the Nigerian president recently issued some executive orders to cut through complex procurement processes and local content rules”, the report added.
Consequently, it pointed out that producers operating in West Africa are under enormous pressure to identify savings elsewhere.
In addition to reimagining their operating models, Deloitte Consulting teams working with oil and gas companies in the region confirm the increasing shift by producers towards spending more on technology and data analytics to increase efficiency and unlock cost savings in operations, finance and supply chain functions by implementing digital tools.
Ultimately, the report alluded that industry stakeholders agree that a portion of the premium is a policy problem, one that requires government action to simplify contracting and reduce avoidable inefficiencies, while attempting to support local supply chains.
Source: myjoyonline.com
