Nigeria’s energy sector is grappling with growing skills shortages that threaten to hinder its efforts to grow oil production.
It is also an affront on the country’s position as one of Africa’s leading oil producers, according to findings by BusinessDay.
Over the past decade, major International Oil Companies (IOCs) such as Shell, ExxonMobil, and Chevron have reduced their investments in Nigeria, opting to focus on more profitable ventures, especially in offshore assets, gas and renewable energy.
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The pullback by IOCs has forced Nigerian oil and gas companies to take over operations once handled by these global giants.
However, the transition has not been smooth. While the local firms have made strides in increasing their stake in the industry, they are grappling with a severe shortage of skilled professionals needed to manage complex projects and sustain production levels.
“In the last two decades, nothing has been done in terms of renewal of the skills that you need to run an oil and gas industry like ours,” a senior oil executive who pleaded anonymity told BusinessDay.
He added, “This shortage is not just a matter of headcount; it poses a significant risk to the ongoing development and sustainability of the local oil and gas industry.”
BusinessDay findings have shown that many of the professionals who once worked with IOCs are either retiring or migrating abroad in search of better opportunities.
The result is a scarcity of experienced engineers, geoscientists, technicians, and project managers – essential roles that are critical to sustaining the country’s oil production levels
Local firms now find themselves in a race to recruit and train professionals who can manage advanced technology and complex operations.
“Nigeria faces a significant manpower challenge. Graduates have a competency gap that’s needed by the energy sector, thus slowing down their integration into the workforce and hindering job creation,” Bolaji Ogundare, group executive director of Newcross Group and Pan Ocean Oil Corporation (Nigeria), said in a discussion with BusinessDay.
“To address this, the government needs to incentivise companies to invest in education. We need to give tax breaks to companies for funding university curriculum and support hiring, training and scholarships which can improve the quality of graduates,” Ogundare noted.
He added, “While not guaranteeing retention, this approach can bolster the overall skillset of the Nigerian workforce. We need to duplicate these incentives across all sectors, not just oil, to benefit the entire youth population. If we execute this strategy, the concept of ‘Japa’ will be minimised.”
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Toyin Banjo, vice chairman of BonnyLight Energy and Offshore Limited, said creating a workforce that is prepared for the future in Nigeria’s oil and gas sector is a complex task that calls for coordinated efforts from the government, corporate sector, and educational institutions.
“Through a focus on talent development and the promotion of an innovative culture, the sector can guarantee its competitiveness in a constantly changing global marketplace,” Banjo said in a note.
The Nigerian government drew up a local content policy enshrined in the Nigerian Oil and Gas Industry Content Development (NOGIC) Act by the Nigerian Content Development Monitoring Board (NCDMB) to compel foreign players to pass on technical skills to local players.
While the NCDMB and local players often say that the goals of the local content law have been largely realised, pointing to huge projects managed by local players to validate the law, operators frankly admit huge gaps still exist.
“Even though progress has been recorded in achieving the provision of the Local Content Act towards human capital development and knowledge transfer in the country, a lot still needs to be done in the areas of aggressive monitoring and enforcement by relevant authorities,” said Chinedu Maduakoh, managing director of Topline Ltd, a local oil firm, at a recent Nigerian Oil and Gas Conference.
He said there is a need to address capacity barriers that prevent Nigerian entities from meeting the technical requirements and knowledge to compete favourably in the oil and gas industry.
The import of these concerns is that it raises the possibility of acute skill gaps when oil majors, who are keen on turning over troubled onshore assets to local players, finally do so.
Onshore assets in the oil-rich Delta region are plagued by rampant criminal sabotage and agitations by host communities for more share in companies’ profits demanded with an intensity that borders on entitlement.
While local players have become more adept at quelling discontent by oil-producing communities in Nigeria, often through measures that would violate international companies’ best practices, they are now forced to confront the reality that technical skills to operate these assets may be lacking.
Local oil producers under the Petroleum Technology Association of Nigeria (PETAN), an association comprising over 90 oil and gas service companies, say they offer over 250 technical services including capabilities in drilling and completion, health, safety, security, environment, and social responsibility, management, and information, project management, among others.
However, the organisation at every oil and gas event in the country mounts advocacy for deepening local participation in Nigeria’s oil and gas sector.
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The reality of energy transitioning is setting off fresh concerns among local players. The workforce of the future will require skills in digitalisation of energy technology, automation, artificial intelligence (AI), and advanced technologies in oil field exploration which are currently few and far between.
“The changing face of the energy sector means that to become competitive, we need to attract new workers and retain the best people to build a supply chain of talent, create entirely new skill-sets and roles of workers and invest in learning and training workers to acquire new skills,” Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, said.
There are concerns about the future of work. A McKinsey report estimates that half of the current work activities can be replaced with technical automation, which could mean the displacement of about 15 percent of the global workforce.
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