Funding challenges in Nigeria’s oil and gas sector

Total's Group Managing Director, on the Deep Water District, recently shared insights on the funding challenges in Nigeria's oil and gas sector on CNBC Africa. He emphasized the need for companies in the industry to enhance their credit worthiness in order to access the necessary funds to achieve the objectives outlined in the Nigerian Local Content Development Act. The interview took place on the sidelines of the Practical Nigerian Content conference where he discussed the progress and potential hurdles facing local companies in the sector. The key theme of the discussion revolved around the importance of increasing compliance to local content requirements and the strategies required to make this a reality. Total's involvement in the GINA project, a flagship endeavor in Nigeria, served as a prime example of successful local content development. With a target of 70% compliance by 2027 set by the board, the Managing Director highlighted the ambitious yet achievable nature of this goal. He cited the GINA project's impressive 77% compliance rate as a testament to the capacity and competence of Nigerians in developing local content. Furthermore, the Managing Director delved into the capital-intensive nature of the project, which required substantial funding to the tune of $16 billion. He shed light on the funding mechanism utilized by Total and the factors that influenced the investment decisions. The interview also touched upon the challenges faced by local companies in accessing funds due to high-interest rates and the need for a shift in mindset towards creditworthiness. The Managing Director emphasized the role of financial institutions and the need for banks to collaborate in forming consortia to support local companies in the industry. By fostering partnerships and enhancing credit profiles, the oil and gas sector in Nigeria can overcome funding challenges and accelerate local content development.