Despite dominating West Africa’s $80 billion oil market, Nigeria faces some of the world’s highest drilling expenses, according to a new report by Deloitte, a global consulting and financial advisory firm.
The report found that Nigeria controls about 60 percent of the regional oil market, followed by Ghana with 20 percent, yet its drilling costs per barrel remain 40 to 50 percent higher than those of other oil-producing countries in the region.
Deloitte projected that West Africa’s oil and gas sector will grow at a compound annual rate of 6.5 percent from 2025 to 2033, with Nigeria and Ghana driving most of the expansion. However, the report warned that several persistent challenges continue to weigh on profitability and investment in the industry.
Among the major issues highlighted were limited access to funding, security concerns in production areas, complex regulatory frameworks, and inadequate infrastructure. Deloitte also noted that while local content rules were designed to strengthen domestic participation, they have unintentionally increased operating costs when necessary goods and services are unavailable locally.
The report linked Nigeria’s inflated production costs to insecurity in oil-rich regions, complicated procurement rules, high insurance premiums, and inefficiencies in local sourcing. It said these factors combine to make West Africa one of the costliest regions in the world for drilling.
Deloitte added that reforms such as the Petroleum Industry Act (PIA), the creation of the $5 billion Africa Energy Bank, and recent executive orders by the Nigerian government aimed at simplifying procurement and local content regulations could help reduce costs and attract more investment.
To stay competitive, the firm observed that oil and gas producers in the region are increasingly investing in digital technologies and data analytics to streamline operations, improve efficiency, and achieve long-term cost savings.
Deloitte concluded that achieving sustainable growth in West Africa’s oil and gas sector will depend on coordinated efforts between governments and the private sector, emphasizing that regulatory stability and technological innovation are key to unlocking the region’s full energy potential.
