Energia Chairman Laments Funding Hurdle For Local Oil Producers
*Says operators pay double for same loan abroad
Peter Uzoho
Chairman of Energia Limited, Mr George Osahon, has decried the huge disparity in financing costs for indigenous upstream oil and gas operators, saying Nigerian banks charge nearly double what their overseas counterparts charge for the same facility, stalling investment and production growth.
Osahon stated this during a panel session at the Nigerian Association of Petroleum Explorationists (NAPE) Pre-Conference Workshop in Lagos, themed “Navigating Nigeria’s Upstream Future: Exploration and Development Approaches vs Energy Security Demand.”
Energia Limited is a Nigerian-owned exploration and production company and operator of Petroleum Mining Lease (PML) 23, formerly Ebendo/Obodeti Marginal Field in (OML) 56, where it holds 55/45 per cent working interest in joint venture with Oando Production and Development Company.
Responding to questions on financing challenges and why indigenous operators are not ramping up production as much, Osahon said operators face a structural dichotomy that punishes local firms.
He cited his company’s experience where a Nigerian bank offered a facility at 14.5 per cent plus manager’s fees and other charges, while the overseas arm of the same bank with same name offered 8.95 per cent for equivalent risk.
“The funny thing about this is what I call the dichotomy in the way some of this things work. We have a bank in Nigeria, Nigerian bank. And they tell you that their interest is 14.5 per cent. And there’s really not much you can do about that. In addition to the 14.5 per cent, they will ask manager’s fees and all of that. You go to the oversea equivalent of the same bank, same name, same everything. You come back with 8.95 per cent,” Osahon said.
He explained that while overseas terms are less tough, the banks limit exposure due to country risk, offering for instance $8 million when a company seeks $20 million to avoid default linked to operating environment.
In Nigeria, he said, high rates combined with unrestricted lending push operators into non-performing loans (NPLs) and delayed payments to service providers, not because operators do not want to pay.
Osahon said early local content practice also slowed service sector growth, as some operators awarded jobs to local contractors but paid equivalent value to overseas contractors, undermining real capacity development.
He however said it would be unfair to label Nigerian service providers as incompetent, recalling that the Petroleum Technology Association of Nigeria (PETAN) members single-handedly developed OML 79 efficiently before the industry downturn dispersed the team.
On production ramp-up, the Energia Chairman said ramping up is not about rolling up sleeves, but hinges on finance, clear subsurface understanding, technology and competencies.
He disclosed that a former staff who moved to Brazil told him his team now uses Artificial Intelligence to the point where after AI works, a mathematician must validate before drilling proceeds, while another company uses AI to identify and high-grade prospects before testing.
“We haven’t got there yet,” he said, noting that without such tools, drilling outcomes remain uncertain and failure makes recovery harder.
He added that ramp-up is easier with large assets with multiple compartments where water or gas injection can quickly add barrels, but more challenging for independents with limited assets.
Energia, he said, has built reputation for operational excellence, safety and sustainable development, delivering reliable energy while creating value for host communities, but requires aligned financing, technology adoption and competency development to accelerate growth in line with national energy security aspirations.