$4bn Egina FPSO: LADOL insists on jurisdiction over local content

The lingering litigation over a $4 billion Egina oil platform project between the Lagos Deep Offshore Logistics (LADOL) and Samsung/Total deepened on Wednesday as the oil and gas service provider insists that it has legal rights to undertake the local content aspect of the job.

The contract awarded to Samsung Heavy Industry and LADOL by Total for the integration of a Floating Production Storage and Offloading (FPSO) platform otherwise known as Egina project to be cited at LADOL base in Lagos, assumed litigation following alleged schemes by Samsung to exclude the indigenous firm from the juicy job.

Counsel to LADOL, Professor Fidelis Oditah (QC, SAN), had earlier sought 19 relieves against Samsung and other defendants before Justice Chukwujekwe Aneke, of the Federal High Court, Ikoyi, Lagos, asking for a declaration that the contract awarded by Total to Samsung on or about 15 March 2013 is subject to the Nigerian Oil and Gas Industry Content Development Act 2010.

In his submission at the hearing Wednesday, Oditah noted that  since the Nigerian Content Act 2010 was enacted for the benefit of all Nigerians, his client being a Nigerian entity has the right to sue for local content breaches, where the relevant government agency fails to do so.

Oditah was responding to earlier submission by Counsel to the First Defendant (Total), Chief Wole Olanipekun (SAN), that LADOL being a ‘contractual beneficiary’ in the contentious project lacked the locus standi to sue for alleged local content breaches.

Olanipekun was also corroborated by Counsel to the Second defendant (Total), Adewole Atake (SAN), who on his part urged the court to strike out his client from the suit, saying “Total was not party to 18 different contracts signed between the plaintiff and the first defendant”.

Other reliefs being sought by the plaintiff includes 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”.

The plaintiff Counsel who referred to the initial proceedings however maintained that his client, LADOL, was presented by the first and second defendants to win the lofty contract as the local content partner, only for Samsung to embark on moves to dump the indigenous company.

On the issue of jurisdiction, Oditah further buttressed his claims that LADOL being an entity recognized and licensed by Nigerian Exports Processing Zones (NEPZA) Act, which is self autonomous (can operate on its own); it is qualified to sue for breaches.

The Presiding Judge however adjourned ruling on the objections to June 3, 2014.

Speaking with journalists after the hearing, Counsel to LADOL, Professor Fidelis Oditah, said the case at hand was an attempt for the first time, to test the efficacy of the Nigerian Local Content Act 2010, as it relates to its enforcement in the nation’s Oil and Gas Industry. “The proceedings are designed to test the efficacy of the Nigerian Local Content Act”, he said.

“The contention of my client LADOL is that having been used by Samsung as the local content vehicle to win this major contract of $4billion, it is not open to Samsung to say that our client is no longer the local content partner.

“What is even more perplexing in a case like this is that the contract allocated the sum of $214 million dollars for the construction of facilities at LADOL.  This 214 million dollars is part of what Samsung is trying to put in the pocket and sabotage the Nigerian economy by doing so, we say that the court should not allow them to do so.

“The Court will rule on this by June 3 2014, it is however instructive to note that what the Nigerian Content Monitoring Board set out to do in its frame work document is that where there is any major oil and gas project in Nigeria, that major oil and gas project should leave a legacy facility for the benefit of Nigerians and to create job for Nigerians.

“It is in that spirit that this Egina FPSO contract made the provision for $214 million for construction of the fabrication yard and integration of facility at LADOL, Oditah declared.

Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.