$3.8bn Egina FPSO: LADOL alleges breach of court order by Samsung

There are fresh worries on the likely outcome of the court hearing on the controversial $3.8 billion Egina oil platform contract between the Lagos Deep Offshore Logistics (LADOL) and Samsung/Total.

This is following the claims by the plaintiff, LADOL, that the first defendant, Samsung Heavy Industries (SHI), had breached an earlier ruling by Justice Chukwujekwu Aneke of the Federal High Court, Ikoyi, Lagos that parties should maintain status quo pending the determination of the suit.

Fidelis Odita, counsel to LADOL, told the court that despite the January 24, 2014 order, Samsung had on February 27 and 28, 2014 made presentations to the Nigerian National Petroleum Corporation (NNPC) of its plans to replace LADOL with another company as its partner in the local content project.

Recall that the $3.8 billion contract awarded to Samsung Heavy Industry and LADOL by Total for the integration of a Floating Production Storage and Offloading (FPSO) platform known as Egina at LADOL base in Lagos became a subject of litigation following alleged schemes by Samsung to exclude the indigenous partner, LADOL, from the job.

BusinessDay gathered that the fourth defendant, the Federal Ministry of Petroleum Recourses, also failed to make representation at the court’s proceedings. Others joined in the suit are Total Upstream Nigeria Limited (Total) and the Nigerian Content Monitoring Board (NCDMB).

Justice Aneke, who frowned at the alleged breach of his order for parties to maintain status quo, was apparently not taken in by the defence counsel, Wole Olanipekun, who claimed ignorance of his client’s presentation to NNPC.

The presiding judge, however, adjourned hearing to April 16, 2014, following the ‘conditional appearance’ (appearance for the first time) of the counsel to the third defendant (NCDMB), Chidi Ilogu, who pleaded for time to enable him prepare his case.

Speaking with journalists after the hearing, Odita, counsel to LADOL, said the case at hand was a test for the efficacy of the Nigerian Local Content Act 2010 as it relates to its enforcement in the nation’s oil and gas industry.

“The contention of my client LADOL is that having been used by Samsung as the local content vehicle to win the contract worth $3.8 billion, it is not open to Samsung to say that our client is no longer the local content partner,” he explained.

“The confusing thing about the case is that the contract allocated the sum of $214 million for the construction of facilities at LADOL. This $214 million is part of what Samsung is trying to put in the pocket and sabotage the Nigerian economy. We say that the court should not allow this to happen. If Samsung, in violation of the status quo order, continues to make presentation to the NNPC, we will issue contempt proceedings against Samsung, NNPC and Total,” he said.

Also commenting, Zulu Okafor, a stakeholder present at the hearing, expressed excitement over the appearance of NCDMB in court. He described the suit as a test case for the Nigerian local content because the economy had lost over $280 billion to foreign players in the oil and gas sector between 1956 and 2006 before the enactment of the law, while noting that Nigeria has been able to save over $200 billion worth of jobs since local content came into play.