Osinbajo Intervenes in Total’s $16bn Egina Oilfield Dispute

Osinbajo Intervenes in Total’s $16bn Egina Oilfield Dispute
Acting President, Prof. Yemi Osinbajo

•December target for 200,000bpd first oil under threat

Acting President Yemi Osinbajo will be in Lagos friday as part of his efforts to settle the dispute threatening the ongoing integration of the $3.3 billion Floating Production Storage Offloading (FPSO) unit constructed for the $16 billion Egina Deepwater oilfield being developed by the French oil major, Total, media’s investigation has revealed.

The visit follows the allegations by some international oil companies (IOCs) behind the Egina project that the efforts of President Muhammadu Buhari’s administration to increase Nigeria’s crude oil production capacity by 200,000 barrels per day in December 2018 through the Egina deepwater oil field, is under threat, following a demand of $33 million by the Global Resources Free Zone Management Company (GRFZMC), a subsidiary of LADOL.

Media gathered that the acting president, who is also the Chairman of the Presidential Enabling Business Environment Council (PEBEC), would visit LADOL to get the details of the dispute and inspect the FPSO and the integration yard (SHI-MCI FZE) built by Samsung Heavy Industries (SHI) of Korea at the LADOL free zone in Lagos.

The IOCs behind the Egina project alleged that the demand by LADOL for SHI-MCI FZE to pay $33 million as one per cent Free on Board (FOB) charges before the FPSO would sail away to the Egina deepwater field would frustrate federal government’s efforts to make Nigeria the hub of FPSO integration in Africa and also scare potential investors.

It was alleged that the $33 million demand, which is one per cent of the cost of the FPSO, is frustrating the ongoing integration, thus potentially putting the efforts to bring the Egina field on stream by the end of this year in jeopardy.

However, the Managing Director of LADOL, Dr. Amy Jadesimi, told journalists in Lagos, that the charges were mandated by the federal government policy, adding that no company operating in the LADOL free zone had been made to pay charges not mandated by the government.

“This is not a unilateral action by us, and to say otherwise is completely false and highly mischievous since we have been transparent at all times,” she said.

“The enterprises operating within the LADOL free zone and the related parties are aware of the charges and the rules and regulations in detail. The charges are known and required to maintain the zones and the free zone scheme,” she explained.

LADOL also placed advertorials in some national dailies yesterday, where it argued that all charges in the free zone are statutory, including the controversial one per cent FOB imposed on Egina FPSO.

But the promoters of the Egina project have insisted that the $33 million being demanded by GRFMZC was not in the contract documents or in the NEPZA regulation.

A source close to the project promoters, has also described as curious, the fact that the demand for the payment of $33 million was made by Global Resource Management Free Zone Company, a subsidiary of LADOL.

“GRMFZC is unknowingly frustrating the project and scaring other investors. The one per cent levy for the Nigerian Content Development and Monitoring Board (NCDMB) was clearly stated in the Egina contract document right from the bidding stage but this one per cent FOB is a strange development. Where do you expect the contractors to raise $33 million as the LADOL Free Zone tariff, which has no legal basis?,” an official of one of the IOCs queried.

“I can confirm to you that the VP is coming tomorrow on a fact-finding. The chief executive officers of all the IOCs will be present. But we have information that the management of the free zone will not allow him to visit the multi-million dollar FPSO integration yard where SHI invested over $300 million. He will only visit the FPSO,” he added.

The FPSO, which was built by SHI, sailed away from the quayside at Samsung Yard in Geoje, South Korea, on October 31, 2017 and arrived at the Samsung Yard (SHI-MCI FZE quayside) in LADOL free zone, where it is currently being integrated locally.

After the integration, it sails away to the deep offshore oil field in Oil Mining Lease (OML) 130.
The SHI-MCI FZE is a fabrication and integration yard, the only one of its kind in Africa, built by SHI as part of the efforts to make Nigeria the hub of FPSO integration in Africa.

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