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Egina FPSO Opens Issues Around Local Content Manipulation

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The local content gain of the $3.3billion Floating Production Storage and Offloading, (FPSO) that would drive the 200,000 barrels a day Egina oil field production operated by Total is being eroded by allegations of graft, CHIKA IZUORA writes.

The activities of Samsung Heavy Industries, (SHI), in Nigeria is well known for some reasons at least it has helped to broaden local content implementation in the oil and gas industry. The company successfully built and delivered the multi-billion dollar Egina Floating Production and Offloading (FPSO) vessel which is expected to add 200,000 barrels per day of crude oil to Nigeria’s production by the end of this year.

However, the flip side of the good for Samsung is the alleged graft and manipulation it has brought to bear in the execution and delivery of the Egina FPSO project.

Counsel to Lagos Deep Offshore Logistics Base (LADOL), Prof. Fidelis Oditah, recently accused Samsung Heavy Industries – a subsidiary of the Samsung Group – of trying to entrench its corrupt tendencies in Nigeria.

Oditah stated this in the backdrop of alleged move by the South Korean company to take over facility at the Lagos Free Trade Zone belonging to LADOL.

Speaking with journalists in Lagos, Oditah said Samsung was pressing to illegally take over the land and had written to both the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Port Authority (NPA), asking to be sold the portion of land inside LADOL, which was leased to it (Samsung) by LADOL for the Egina project.

Regretting this move which he said was against Nigeria’s local content law, he said, “Nowhere in the world can a tenant overthrow its landlord. Samsung is a contractor in Nigeria, not an investor, and the land on which it built its facility was leased to it just for the duration of the Egina project, and is open to other contractors with similar projects.

“Samsung wrote to NIMASA and NPA, asking to be given part of LADOL’s land. If Samsung wants to build its own facility, it should first come in as an investor and ask for its own land, not LADOL’s land,” Oditah stated.

Samsung was reportedly said to be the lowest bidder among the contractors who had vied for the Egina FPSO contract, but allegedly connived to swing the contract to itself shoving aside some of the necessary conditions required of the would-be winner of the contract.

Industry observers also point to Samsung’s alleged subversion of the Nigerian Content Policy in the execution of the Egina FPSO project. According to them, the integration of the topsides of the Egina FPSO at the LADOL yard in Lagos earlier this year had seen personnel being shipped into the country from South Korea to handle the very integration of the vessel originally planned to be handled by Nigerians at the LADOL yard.

The development thus created jobs for the Koreans here in Nigeria to the detriment of the Nigerian labour force, against the provisions of the Nigerian Content Act and the promise by the Nigerian Content Development and Management Board (NCDMB), NNPC, and Total, the operators of the FPSO, that the project would create substantial number of jobs for Nigerians.

There is also an ongoing controversy about Samsung demanding an extra $300 million on the Egina FPSO project. Sources have not specified what the extra $300 million being demanded by Samsung is meant for, but it was learnt that Samsung was bent on collecting the money from Total and its Egina project joint venture partners, which include NNPC, before a final hand over of the vessel.

It was further reported that Nigerians who were working on the vessel were employed on contract.

In fact, on the second visit around February/March, a protest by the Nigerian contract workers had erupted at LADOL. It was gathered from some of the workers that they were worried about being jobless after the Egina FPSO leaves the shore of LADOL for the oil field.

On another visit in August, it was observed that Samsung had shipped in more South Koreans into LADOL.

But when LEADERSHIP contacted Samsung, a highly – placed official denied the allegations demanding that those flying the rumours should back it up with documents.

“ I can tell you that we followed due process and we bidded against Hyundai Heavy Industries.

“This is not the first time such allegations are coming up but the consortium of the Nigerian National Petroleum Corporation (NNPC) ,and NAPIMS, the NCDMB all evaluated our technical and commercial bid before announcing the winner of the project,” said the official who did not want to be named.

She said the propaganda  by those who lost the contract would not deter the determination of SHI to boost local capacity and advance local content in the industry.





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