NNPC in questionable Egina FPSO award to Samsung

03 January 2013, Sweetcrude, Houston – Samsung, the Korean Ship builder, engineering, procurement and construction giant appears to have been endorsed by the group executive committee, GEC, of the Nigerian National Petroleum Corporation, NNPC, for execution of the Egina Floating, Production, Storage and Offloading, FPSO, vessel in what appears to be questionable circumstances.

Egina oil field is a $15 billion project development being promoted by Total, the French oil giant in partnership with the NNPC, on behalf of the Nigerian government.

An international bids tender process for the Egina project, superintended by NAPIMS, the NNPC investment arm; the Department of Petroleum Resources, DPR; the Nigerian Content Development and Monitoring Board, NCDMB; and Total had seen the emergence of Hyundai Heavy Industries, HHI, to handle the FPSO packages valued between $3.5 billion – $4 billion.

NAPIMS had consequently forwarded the name of HHI as the preferred bidder for the FPSO packages to the NNPC for GEC consideration.

It was gathered that in a meeting which took place after a GEC meeting held a few days before Christmas, Mr. Andrew Yakubu, the NNPC group managing director, Abiye Membere, the NNPC group executive director and Mr. Tony Madichie, the NNPC secretary and legal adviser, decided to award Samsung the FPSO package.

Although we gathered that Samsung gave a 5 per cent discount on the bid advanced by HHI, the company did not participate in the initial bids tender exercise, neither was it recommended by the superintending authorities.

Repeated phone calls including a text message to Mr. Membere for clarification proved abortive. Similarly, phone calls to Mr. Yakubu to obtain clarification were not answered.

While the development runs against the grain of due process, checks revealed that, Samsung has never executed any project in Nigeria neither does it have any presence in the country.

Further checks revealed that the Egina project has a 51 months execution timeline, and it will take anywhere between 4 and 5 years for Samsung to construct a facility in Nigeria to execute the Egina FPSO package.

Although officials of Total refused to be quoted, those who spoke on condition of anonymity referred us to a letter the company had written to the NNPC insisting on sticking to due process.

“The NNPC management must either stick to due process or forget about this project. Already, the way and manner they have gone about this, exposes all those involved to investigation by the government of the UK under the anti-bribery law and the US Security and Exchange Commission, SEC, over possible contravention of the Foreign Corrupt Practices Act, FCPA,” the lady noted.

“It is now obvious that the so called effort to save Nigeria money has been a ruse all along to smuggle in Samsung to handle the FPSO package. If indeed, the NNPC management had altruistic motive, why didn’t they ask HHI to reduce their bid by 5 per cent?

This is a very strange approach to doing business; we have never witnessed anything like this before, and we are afraid that the fallout could have very negative consequences for the image of the corporation and the government.”

Shortly after Mr. Abiye Membere, was appointed group executive director in charge of exploration and production, and his predecessor, Mr. Andrew Yakubu was elevated to the position of Group Managing Director, management of the corporation, they decided that all the projects which had been sent for GEC consideration were too pricey.

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  • This appears stranger than fiction. How can a company that didn’t participate in an international tender be awarded a project of this magnitude. We hope that the minister of petroleum is aware of this and manages to salvage the situation before it blows up in Nigeria’s face. What a shame!

  • daudi sha

    There is clearly more to this than we are reading.
    SHI and HHI are both very capable of delivering the products required for Nigeria.

    The real question is where is the true Nigerian Content in this and how much will Nigerians be allowed to participate in the project, given the limited capacity in the country.

    This should be the real starting point for Nigerian Content to be launched and start training Nigerians the Skills we need for the future.

    Where is the Plan for In-Shore Integration for this FPSO ? Transparency Beckons !