A Review of the Nigerian Energy Industry

Intels behind NNPC selection of Samsung for Egina FPSO

*Nigerian Content scope undermined

06 January 2013, Sweetcrude, Houston – Investigations have revealed that Integrated Logistics Services, Intels, a Nigerian company with a logistics base in Ikpokiri/Onne, near Port Harcourt may be behind the subversion of the 3 tier contracting process of the Nigeria National Petroleum Corporation, NNPC, and the subsequent selection of Samsung for execution of the $3.8 billion Egina FPSO packages.

Indications are that if the NNPC Board endorses the selection of Samsung for execution of the Egina FPSO packages, the Nigerian Content scope which would have seen the creation of over 20,000 jobs in country would be undermined.

Even though Samsung did not participate in the bids tender processes for execution of the Egina project, and despite Hyundai Heavy Industries, HHI, having participated and emerged preferred bidder, and subsequently recommended by NAPIMS, the investment arm of the NNPC, the management of the NNPC has selected Samsung to execute the project under circumstances that appear inexplicable.

Checks revealed that Samsung had entered into a partnership with Intels for execution of the Egina FPSO packages and that the Nigeria company, had deployed its immense political clout to pressure the NNPC management into breaking its own tendering processes, and rules of engagement.

In a meeting which took place after a Group Executive Committee 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 select Samsung for the FPSO package.

Even though 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 were not answered.

Nigerian Content scope
We gathered that because the selection of Samsung runs against the grain of due process, the Nigerian Content scope was been completely left out, putting in jeopardy the possible gains derivable thereof, and the aspirations of the federal government.

Further checks revealed that Samsung has never executed any project in Nigeria neither does it have any presence in the country.

Samsung is currently touting Intels as the Nigerian company to execute the local content scope of the FPSO packages. However, Intels does not have any pedigree in engineering and fabrication.

“Obviously, no aspect of the FPSO package will be executed in Nigeria if Samsung gets the endorsement of the NNPC Board, because Intels certainly can’t deliver within the project time frame,” an NNPC staff who pleaded anonymity, said.

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 local content scope of the Egina FPSO package.

The company is a logistics services provider which enjoys a monopoly of sorts over operations of the Nigerian Ports Authority, NPA.

Our checks revealed that the company has not engaged in any bids or tendering process for any project In Nigeria, and their rates which are dictated to both the NPA and NAPIMS for logistics services have only gone up over the years.

Intels is owned and operated by Mr. Gabriele Volpi, an Italian businessman and other shareholders of the company include former Vice President Atiku Abubakar whose son, Adamu Abubakar, is an executive director.

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  • The NNPC owes stakeholders an explanation over its decision to jettison its well tested and proven 3 tier bids tendering process – why pick a company that didn’t participate in the process without recourse to NAPIMS, its own agency that superintended the process in the first place and recommended a preferred bidder who emerged from the process. Does the NNPC management know the implications of thise action on the image of the government and the implication for Nigerian content?

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  • daudi sha

    This is not so bad as it appears. Forget Intels, they are just a facility provider, let Samsung build a Fabrication yard inside Intels and show that they can Fabricate and Integrate in Nigeria. the jobs will still be created for Nigerians if NCDMB do their bit and apply the law.
    Relax, too many people in our country shoot from the hip too fast, let’s wait and see what transpires.
    The FPSO must be integrated inshore Nigeria, so as per my last comments let’s challenge NCDMB to apply the law and watch Samsung perform in Nigeria.
    It doesn’t matter who gets the contract, HHI or SHI, focus on two things, 1, will Nigerians benefit from the experience and 2, will the work be of the correct quality for Nigeria Oil and Gas Production.