- Is Agip riding roughshod over an indigenous oil firm?
Oil industry experts seem to believe that one major reason the Petroleum Industry Bill (PIB) has not seen the light of day is because of the overarching influence the International Oil Companies (IOCs) have over Nigeria’s oil sector. These giant firms include Shell Petroleum Development Company, (SPDC), Chevron, ExxonMobil, Total and Nigerian Agip Oil Company, (Agip).
These oil majors that have operated in the country since pre-independence sometimes wield such powers and influence that are overwhelming even among government circles. At a point in Nigeria’s history, the leading ones among them were said to have their own police and quasi-army. In fact they did not only have the capacity to critically influence the course of government, they could actually effect a change in government.
While this may have been possible in the military era, so much have changed in the polity now. Notwithstanding, occasional muscle-flexing and power shows still go on. Perhaps this undergirds the long-running tiff between one of the majors, Agip and an indigenous oil service firm, Arco Petrochemical Engineering Company Plc., (Arco).
According to reports, Agip, an oil giant, may be dealing unfairly with a small indigenous oil service firm for the following reasons: One, Agip which has Italian origin, is accused of unilaterally revoking its service contract with Arco, and awarding same to another oil service firm of Italian origin, not minding the requirements of the local content laws. Two, Agip is said to have repudiated a court injunction that status quo ante be maintained in the matter between the two firms. And three, Agip is alleged to have taken advantage of the crises in Nigeria’s petroleum industry to trample upon Arco and deny it of a legitimate business proposition.
As the story goes, in 2006, Agip signed a maintenance contract with Arco which had Nuovo Pignone as its foreign technical partner. It was a five-year contract which lapsed in 2011. The contract was for the maintenance of Agip’s Obob/Kwale/Ebocha Gas Plant. This is a strategic plant that supplies gas to the Nigerian Liquefied Natural Gas (NLNG); Eleme Petrochemicals and Omoku Power Plant. Arco had also carried out an interim contract up till 2013; six months of which it handled alone without foreign partners because the Niger Delta areas were too hot for expatriates at that point.
All these contracts were approved by the board of the joint venture partner, the Nigerian National Petroleum Corporation (NNPC) and the National Petroleum Investment Management Services (NAPIMS). However, when time came to award another five-year contract, Arco was literally bypassed and the job was unilaterally handed to an Italian oil service firm based in Nigeria, Plantgeria.
The NNPC board was supposed to approve all such contracts but because it did not meet for quite a while, Agip acted unilaterally. Though the oil major averred that it offered the job to the firm with the most cost-effective bid, Plantgeria, having quoted $10 million against $37 million for which Arco had done the job all these years.
But Arco insists that Agip was being clever by half and economical with the truth. It stated that it is not possible to deliver the sort of maintenance job it does for the sum Plantgeria has bid; besides, the low bid must be a ploy to remove Arco from the picture only to increase the contract sum down the line. It also noted that the offshore component of the job handled by its new technical partner, GE had been extracted from the contract. In other words, the contract had been split.
To buttress the point that it has been hard done by, Arco says that both Plantgeria and GE are now poaching its staff.
We will urge Agip to endeavour to be sensitive to the local content laws and requirements of the country. And since the matter is in court, we urge both parties to return to status quo as requested by the court.
