A Review of the Nigerian Energy Industry

Fresh crisis looms as NUPENG hands Agip ultimatum over stop-gap contracts

Agip21 August 2014, Lagos – There is growing tension in both the downstream and the upstream sectors of the oil and gas industry, following a 14-day ultimatum handed over to Nigerian Agip Oil Company (NAOC) by the Port Harcourt Zone of the Nigerian Union of Petroleum and Natural Gas (NUPENG).

Rising from their August 11, 2014 emergency meeting, NUPENG had handed over an ultimatum to NAOC to respect the April and June 2014 letters from the National Petroleum Investment Management Services (NAPIMS), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

The letters, according to NUPENG, directed the Italian company to discuss the stop-gap contract of turbine and related equipment maintenance contract in OB|OB, Ebocha and Kwale with Arco Petroleum Nigeria Plc.

NUPENG observed that the refusal of NAOC to obey NAPIMS directive has posed a great threat to the job of her members in Arco, who have contributed their quota to the economic growth of the country, since the contractor mobilised to site in 2006.

The labour union alleged that the purported replacement contractor, Plantgeria Nigeria Limited, has concluded plans to cut the workforce by 60 per cent and salaries by 40 per cent.

It also accused Plantgeria of forcing the workers to sign a ‘yellow-do contract’, denouncing membership of NUPENG or PENGASSAN.

NUPENG also called on NAOC to reverse the terminated service contracts in Lagos, Port Harcourt, OB/OB, Ebocha and Kwale, which have rendered the workers jobless.

It also condemned what it described as the insensitivity of the company in her refusal to renew the workers collective agreement, which expired in 2012.

NUPENG’s resolution, which was signed by the Zonal Chairman, Mr. Godwin Eruba and Senior Organising Secretary, Mr. Lawrence Alabala, also insisted that all the 13 workers sacked in April 2014 by BK Tubulars Nigeria Limited in connivance with the Free Trade Zone Authority, Onne, should be recalled.

The union threatened to disrupt operations in both the downstream and upstream at the expiration of the ultimatum.

NAPIMS, a subsidiary of the NNPC and NAOC are heading for a collision over the award of multi-million dollar maintenance service contract for gas turbines and related equipment for OB/OB, Ebocha and Kwale Gas plants in Delta State.

While NAPIMS has directed NAOC, operator of NNPC/NAOC Joint Venture, to award the joint venture contract to Arco Petrochemical Limited, the Italian firm has insisted on awarding the contract to Plantgeria, a local firm being put forward by NAOC.

In letter addressed to the Vice-Chairman and Managing Director of NAOC, Mr. Massimo Insulla, the NNPC’s Group General Manager in charge of NAPIMS, Mr. Jonathan Okehs, had warned the Italian firm that NAPIMS would not support any cost expended on NAOC maintenance services contract for gas turbines and related equipment for OB/OB, Ebocha and Kwale Gas Plants, arising from NAOC’s execution of such services with Plantgeria.

The letter with reference number NAP/GD/GM/84, which was dated June 13, 2014 and obtained by THISDAY also stated that “NAOC proposal to execute an interim award contract with Plantgeria for a replacement tender of which award recommendation has not been presented for NNPC Board consideration and approval is declined and not approved.”

Okehs directed NAOC to “immediately commence negotiation with Arco Petrochemical Limited with a view to awarding a six-month Stop-Gap contract using the manpower loading that was approved for the 2013 Stop Gap Contract.”

Okehs reminded NAOC that NAPIMS had earlier advised it to hold negotiation with Arco Petrochemical on April 29, 2014 but the Italian oil major apparently ignored the advice.

He noted that the execution of a bridge framework agreement with Arco Petrochemical Limited would enable the joint venture partners maintain the facilities, pending the award of the ongoing replacement contract.


– This Day

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