Protracted legal tussle may delay Egina FPSO project as court adjourns to March 11

Hopes of  an early resolution of litigations over a $3.8 billion Egina oil platform project between the Lagos Deep Offshore Logistics (LADOL) and Samsung/Total appears dashed at the weekend, as both counsels to the plaintiff and defendants argued over jurisdiction, prompting Justice Chuku-Jekwu Aneke of the Federal High Court, Lagos, to adjourn hearing to March 11, 2014.

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.

The development had prompted LADOL to seek injunctions against Samsung and Total last week, based on the emerging controversy. Also joined in the suite are Total Upstream Nigeria Limited (Total), Nigerian Content Monitoring Board (NCDMB) and the Minister of Petroleum Resources.

The case however assumed a fresh dimension on Friday when counsels to the first and second defendants, Wole Olanipekun SAN, and Adewale Atake, in their respective submissions argued that the court lacked jurisdiction to entertain the case.

Counsel to LADOL, Professor Fidelis Oditah, QC SAN, however objected to the plea, arguing that the court was good to hear the case as well as entertain hearings on the injunctions he earlier sought on behalf of his client to restrain the defendants from excluding LADOL from the project execution.

Justice Aneke adjourned hearing to March 11, 2014, while asking parties to maintain the status quo.

Speaking with newsmen at the court’s premises shortly after the hearing, Professor Oditah said the bone of contention in the issue borders on local content provisions in the said contract which was jointly won by his client and the first defendant.

“This is an issue that concerns the need to empower Nigerians, and what we are saying is that any construction of this FPSO for Total being the second defendant, the plaintiff who has the local content must continue. He cannot be used to get this contract and afterwards be dumped. That’s simply what he (plaintiff) is claiming and the first and second defendants are all trying to run away from it by claiming that the plaintiff has no jurist effect, or that the court has no jurisdiction. We will meet again on the 11th of March,” he said.

Other reliefs being sought by the LADOL 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 bidded 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.
Findings revealed that the collaboration between LADOL and Samsung began in early 2010, when Total announced its intention to begin the development of its Egina oilfield.