Local Content Misuse Inflated Costs, Stunted Capacity In Nigeria’s Oil, Gas Sector

The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, has faulted the implementation of Nigeria’s local content framework, saying its misapplication over the years drove up project costs and failed to build genuine indigenous capacity in the oil and gas industry.

Lokpobiri spoke at the Pre-Conference Opening of the 2026 Nigeria International Energy Summit (NIES) on Monday in Abuja, themed: “Energy for Peace and Prosperity: Securing Our Shared Future.”

The summit brought together key oil and gas stakeholders from Nigeria and across the globe, including industry leaders, policymakers and investors, to deliberate on the future of the nation’s energy sector.

The Minister, who stressed that local content remains critical to achieving sustainable growth in the industry, however, warned that its poor application had undermined its original objectives.

He explained that the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, enacted in 2010 to build indigenous capacity, instead contributed to inflated project costs and limited the growth of local companies.

Lokpobiri pointed out that oil and gas project costs in Nigeria were significantly higher than similar projects in other countries, a development he said is constraining industry growth.

However, he noted that the present administration of President Bola Tinubu has addressed most of the identified challenges through various Executive Orders.

The Minister disclosed that although provisions were made to support indigenous companies with financing, some beneficiaries failed to translate the funds into capacity growth.

He said, “There are provisions to support local companies with financing, and a couple of companies have actually benefited from those finances. Unfortunately, most of those companies didn’t actually grow in any capacity. What they did was to take the money and finance their lifestyles.

“And that is the reason why the Minister is Chairman of the Government Council. So that we can bring real strategic leadership to the application of living standards. But the good news is that all these issues are no longer there.”

Lokpobiri maintained that Nigeria was large enough to accommodate both Engineering, Procurement and Construction (EPC) firms and indigenous operators, urging collaboration rather than competition.

According to him, local and international companies could co-exist to create value and develop the capacity required to strengthen the industry.

Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, who described gas as Nigeria’s most practical pathway to economic diversification, industrial expansion and shared prosperity.

Represented by the Permanent Secretary, Ministry of Petroleum Resources, Mrs Patience Oyekunle, the minister said, however, that realising this potential would require a fundamental rethink of local content implementation across the gas value chain.

“It requires a deliberate and strategic shift in how we conceive, design, and implement local content across the gas value chain.

“For Nigeria, gas remains the cornerstone of our Energy Transition Plan and our broader industrial agenda.

“From power generation and clean cooking, to fertilisers, petrochemicals, methanol, and compressed natural gas for transportation, the gas value chain offers unparalleled opportunities for job creation, industrial clustering, and regional integration.

“These opportunities, however, can only be sustained if local companies possess the requisite skills, technology, financing, and governance standards to compete at scale.”

Ekpo added that performance-driven local content in the gas sector demands a new compact among government, industry, financiers and educational institutions.

“Industry operators must embed local capacity development into project design, not as an afterthought, but as a core value driver. Financial institutions must innovate to de-risk gas projects for indigenous firms. And our training and research institutions must align skills development with the technical, digital, and operational demands of a modern gas industry.

“If we get this right, local content becomes a catalyst for the emergence of African industrial powerhouses capable of serving domestic gas markets, competing effectively in regional projects, and exporting services, skills, and expertise beyond the continent. This is how gas becomes not only a transition fuel, but a true transformation fuel,” he added.

On her part, the Permanent Secretary, Ministry of Petroleum Resources, Mrs Patience Oyekunle, said genuine local content should be assessed beyond numerical compliance.

According to her, true local content was not defined by percentages on paper, but measured by the depth of domestic capability, the sophistication of local supply chains, the quality of jobs created, and the ability of Nigerian and African firms to compete first regionally, and ultimately globally.

Represented by the Director of Midstream and Downstream, Ministry of Petroleum Resources, Mrs Irene Ikemba, the Permanent Secretary stressed that getting local content right would unlock inclusive and sustainable prosperity for the country.

“We will build industries that outlive oil fields, create jobs and build skill and capabilities that outlast projects, and sustainably deliver energy that truly supports peace and prosperity across our continent,” she added.