Energy Analyst, Olabode Sowunmi has said Nigeria’s local content policy in the oil and gas sector is designed to build domestic capacity, not to block foreign companies.
In an interview with Arise News on Tuesday, Sowunmi responded to remarks by the Minister of State for Petroleum Resources, Senator Hannigan Lukwobiri, at the pre-conference opening of the 2026 Niger International Energy Summit in Abuja.
Lukwobiri had noted that while Nigerian firms currently lack the capacity to independently execute complex offshore Engineering, Procurement, and Construction (EPC) projects, the solution lies in collaboration rather than exclusion.
He added that the Nigerian Content Act provides financing support to indigenous companies to enhance their competitiveness.
Reacting to these statements, Sowunmi said the minister’s remarks may have been misinterpreted. “I want to believe very sincerely that it must have been quoted out of context because of a number of things,” he said. He explained that the oil and gas industry operates through specialised subcontractors, particularly for offshore drilling and exploration.
“Oil exploration has a history spanning over 100 years, dating back to Standard Oil and Rockefeller. Back then, companies managed the entire value chain, but today, it’s different. Even major international operators like Shell or Chevron subcontract offshore exploration work to specialised oilfield companies like Schlumberger, Halliburton, and Baker Hughes,” Sowunmi said. “It’s similar to building a skyscraper—you have companies providing cranes, others supplying steel. You are not expecting one company to handle everything.”
Sowunmi emphasised that the structure is standard industry practice and not unique to Nigeria. “The idea that local companies are incapable of executing these tasks should be put in context. Whoever reported that may have had a limited understanding of how the industry functions,” he said.
He added that while there are imperfections in Nigeria’s local content execution, processes can be refined. “As the late MKO Abiola said, simply because the midwife is a witch, does not mean we should throw the baby and the bathwater away. We refine the process, set standards, and ensure delivery and productivity are improved.”
Addressing the claim that local companies subcontract offshore contracts to foreign operators, Sowunmi highlighted that this is a deliberate operational strategy, not a capacity deficit. “In telecoms or other sectors, companies focus on their core competencies and subcontract specialised tasks. It’s about efficiency and expertise, not incapacity,” he said.
Sowunmi also noted the role of industry institutions and banks in supporting capacity development. “Institutions like the Nigerian Society of Engineers, the Society for Petroleum Engineers, PTAN, and IPPG provide guidance and oversight. Funding from banks supports capacity, but knowledge, technical skills, and global best practices are equally important,” he said.
He cited a 2015 example of Nigerian professionals who had won offshore contracts independently, illustrating the capability of Nigerian companies. “Nigeria has developed significant local content capacity, and when compared with other African countries like South Africa or Egypt, we are leading in oil and gas expertise,” Sowunmi said.
He concluded: “The local content policy is about building Nigerian capacity while working alongside foreign operators, not about shutting anyone out. If this approach succeeds, it maximises Nigeria’s competitiveness and strengthens the sector.”
Boluwatife Enome
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