West Africa has become one of the most expensive regions in the world for oil drilling, making it increasingly difficult for African producers, particularly in Nigeria to compete globally, according to Deloitte’s 2025 West Africa Oil and Gas Outlook.
The report notes that heightened security risks in the Niger Delta significantly raise operational costs, as expatriate roles become more expensive to fill due to the need for additional safety measures.
It explained that these risk premiums add considerably to project costs, often without a corresponding increase in productivity or efficiency.
“Local content rules, while necessary for domestic capacity-building, can further inflate costs when required inputs or services are not readily available in the domestic market. This creates tension between producers and governments, as the intention and the impact often result in duplicated spending. Typically, a project’s first attempt is local sourcing, followed by repeat procurement offshore when delivery fails,” the report stated.
The report added that, in some cases, middlemen are engaged through alliances to satisfy rigid local content requirements. In response to these challenges, the Nigerian president has issued several executive orders aimed at streamlining complex procurement processes and local content regulations.
Consequently, Deloitte noted that oil producers operating in West Africa are under immense pressure to identify savings elsewhere.
In addition to reimagining their operating models, Deloitte’s consulting teams working with oil and gas companies in the region have observed an increasing shift towards investments in technology and data analytics to enhance efficiency and achieve cost savings in operations, finance, and supply chain functions.
Ultimately, the report concluded that industry stakeholders agree a portion of the cost premium stems from policy inefficiencies, underscoring the need for government action to simplify contracting processes and reduce avoidable inefficiencies, while still supporting the growth of local supply chains.
