A Review of the Nigerian Energy Industry

NCDMB begins probe of Arco, Agip dispute

Agip16 September 2014, Lagos – The Nigerian Content Development and Monitoring Board, NCDMB, has commenced probe of the ongoing dispute between Nigerian Agip Oil Company, NAOC, and Arco Petroleum Engineering Company Limited over the maintenance of Obob/Ebocha/Kwale Gas plants.

To this end, the NCDMB in a press statement said it has summoned the Managing Director of NAOC, Mr. Carlo Vito Russo, to a meeting in relation to the dispute.

According to the Executive Secretary, NCDMB, Engineer Ernest Nwapa, the invitation to the Russo followed NCDMB’s receipt of a formal letter of complaint to it by Arco Petroleum on the matter dated September 10, 2014 wherein the company alleged among other things that NAOC and General Electric “are ganging up to forcibly remove an established indigenous contractor like Arco that can prove its mettle in the maintenance of such hi-tech equipment exclusively for six months.”

Commenting on the intervention of the Board, the Executive Secretary, Nwapa explained that the Board would continue to ensure that the provisions of the Nigerian Content Act are adhered to in relation to any contract or operation in the Oil and Gas industry.

Couple of weeks ago, Agip Oil Company and General Electric were accused of attempting to disregard directives from the Nigerian National Petroleum Corporation, NNPC, in the award of contracts for the maintenance of OBOB/Kwale/Ebocha gas plants.

Going by various correspondence between Agip, GE, NAPIMS and Arco, the Board of NNPC awarded a five-year contract (2006 -2011) to Nuovo Pignone (now GE) together with Arco Petrochemical Engineering Company Plc, a wholly-owned Nigerian company as the local Technical Partner, for the maintenance of the   OBOB/Kwale/Ebocha gas plants.  The Nigerian Agip Oil Company (NAOC) allegedly changed the contract terms and awarded the same contract to GE.

Arco which was used as a local technical partner was reduced from being a partner to a sub-contractor. This, it was gathered, was the beginning of a long chain of improprieties by GE and NAOC against local firms in a bid to frustrate the local content law.

According to documents sighted by Vanguard, within one year of the commencement of the contract, the Niger-Delta crisis erupted and GE expatriate staff had to be evacuated from OBOB/Kwale/Ebocha. Arco’s engineers and technicians took up the challenge and successfully maintained the plants for six months before the crises abated and GE staff eventually returned to site.

In gratitude to Arco for managing the plants in its absence, GE poached 19 of Arco’s engineers and technicians, reduced the scope of Arco’s jobs and introduced third-party firms to undertake part of Arco’s scope of work in the contract with the sole aim of making it difficult for Nigeria to realise its local content dream as far as Agip and GE are concerned.
But GE in response to Vanguard’s inquiry through a third party, TPT said: “What do you mean by Arco staff? We are not poaching anybody. We believe that there are qualified and experienced Nigerians from all disciplines that can join the GE family.

”That is why we believe in training, technology and skills transfer. It helps the local economy and it is the right thing to do. “But when asked why recruiting Nigerians to fill expatriate quota and yet pay them low wages? It said; “See answer to question one.”



– Vanguard

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