Lagos Deep Offshore Logistics (LADOL) an indigenous oil servicing company has obtained an order from a Federal High Court in Lagos, restraining Samsung Heavy Industries and others from excluding it ( LADOL) from the execution of the FPSO project.
Industry watchers say court proceedings typically take time and that delays usually result in a scaling up of project costs.
The project in question is the floating production storage and offloading unit (FPSO) meant for Total’s $15 billion Egina deepwater development, offshore Nigeria.
The cost of the FPSO project is $3.8 billion.
In the suit, LADOL is claiming that a significant proportion of the steel fabrication and the integration of the FPSO topsides were meant to be carried out at its yard in the LADOL Free Zone, Tarkwa Bay, Lagos.
Samsung Heavy Industry and Lagos Deep Offshore Logistics had jointly won the contract to build a $3.8 billion oil platform for the project, but LADOL is alleging that there is a plot by Samsung and others to exclude it (LADOL) from the project.
The Egina platform has a projected production capacity of 200,000 barrels per day (b/d) and a storage capacity of 2.3 million barrels.
Also joined in the suit at the Federal High Court before Justice Aneke on Friday, January 24, are, Total Upstream Nigeria Limited (Total), Nigerian Content Monitoring Board (NCDMB), and the Minister of Petroleum Resources.
The $15 billion project is located 130 kilometers offshore Nigeria, and was conceived by Total Upstream Nigeria Limited, in collaboration with the Nigeria National Petroleum Corporation (NNPC), and is expected to take off by the end of 2017.
In the proceedings which were issued for LADOL by Fidelis Oditah QC, SAN, LADOL seeks 19 reliefs against Samsung and other defendants. It is asking the court to make a declaration that a contract awarded by Total to Samsung on or about 15 March 2013 for the construction and installation of a floating production storage and offloading unit (FPSO) at Total’s Egina oilfield in oil mining lease (OML) No 130 in deep offshore Nigeria (the “Egina FPSO Project”) is subject to the Nigerian Oil and Gas Industry Content Development Act 2010.
Other reliefs being sought by the company include a “declaration that the Egina FPSO Project contract was awarded by Total to Samsung with the approval of the Nigerian regulatory authorities, including NNPC, NAPIMS, NCDMB and the Ministry of Petroleum, on the basis inter alia that a significant proportion of the steel fabrication and the integration of the FPSO topsides would be carried out at LADOL’s yard in the LADOL Free Zone, Tarkwa Bay, Lagos.
“A declaration that the Egina FPSO Project contract was also awarded by Total to Samsung on the basis inter alia of Samsung’s representations and assurances to the Nigerian regulatory authorities that Samsung would build and operate training Facility in the LADOL Free Zone for the training and education of Nigerians.
“A declaration that the Egina FPSO Project contract was bided for and obtained by Samsung on the basis of a joint venture and/or arrangement between Samsung and LADOL for the development, construction and operation of an offshore fabrication yard and FPSO integration facilities in the LADOL Free Zone for the purposes, amongst others, of the Egina FPSO Project (Joint Arrangement).
“A declaration that having bided for and represented to the Nigerian regulators that LADOL was its local content partner and on the basis of the Joint Arrangement, obtained the award of the Egina FPSO Project contract, it is not open to Total and Samsung unilaterally to exclude LADOL from the execution of the said contract”.
LADOL, said to be the only wholly Nigerian indigenous oil and gas service provider, is further seeking a declaration that the purported exclusion of the company from the execution/performance of the Egina FPSO Project contract by Total and Samsung, is a violation of the Act and consequently is of no effect whatsoever.
Also being sought are, “an order, pursuant to section 68 of the Act, cancelling the Egina FPSO Project contract, on the basis that the purported exclusion of LADOL from the performance/execution of the Egina FPSO Project contract and Samsung’s failure to build a training school in Nigeria (as it had promised it would) are a violation of the Nigerian National Content law”.
The company further wants a disqualification of Samsung from bidding for or participating in any capacity whatsoever, in any projects, operations, contracts or subcontracts in the Nigerian oil and gas sector.
While appealing to the court to restrain the defendants from excluding it from the execution of the Egina FPSO Project contract, the company further wants the Nigerian authorities similarly restrained from approving any other person as the Nigerian local content partner or local content solution of Samsung, in respect of the work scope (fabrication of steel structures and integration of the FPSO topsides) allocated to it in respect of the Egina FPSO Project.
At a hearing of the case on Friday, 24 January 2014, Mr Justice Aneke ordered the parties to maintain the status quo and not to take any steps to replace LADOL as the local partner of Samsung on the Egina FPSO Project, pending the hearing and determination of LADOL’s application for interlocutory injunctions, which was slated for Friday 7 February 2014.
By: Olusola Bello
