Ofserv Nigeria, Weatherford International in court over Local Content Act

17 March 2016, Lagos –  An indigenous oil service company, Ofserv Nigeria Limited has dragged Weatherford International PLC, to court over alleged breach of contract and flouting the Nigerian Oil and Gas Industry Content Development (NOGICD) Act. Already the matter has been fixed for March 28 for hearing.

Symbol of justiceIt will be recalled that in 2010, the Nigerian government passed into law the NOGICD Act with a view to increase local participation in the oil and gas industry, to facilitate job creation, and promote local enterprise development through increased investments in local supply chains.

Compliance with the NOGICD Act was to be a major criterion for award of contracts to bidders, as a step towards growing the oil & gas sector’s contribution to the nation’s GDP.

The plaintiff, Ofserv, in the suit before a Lagos High Court however alleged that the defendants, Weatherford International and Weatherford Nigeria Limited obtained proprietary market information and contacts from it, while excluding it from execution of contracts that came out from its efforts and resources.

Meanwhile in its notice of preliminary objection, the first defendant, Weatherford International PLC has urged the court to strike out the suit for lack of jurisdiction and that its of no effect whatsoever. The company also requested for an order striking out its name from the suit for non-disclosure of a reasonable cause of action.

Business intelligence

The plaintiff has alleged that Weatherford engaged it to enter into a partnership with Weatherford based on the NOGICD requirements.

Based on that according to the plaintiff, it shared its market data and other business intelligence, introduced Weatherford to drilling services decision-makers and operators in the Nigerian market, and ultimately expended significant resources to facilitate Weatherford’s market entry and secure a drilling services contract for joint execution.

However it alleged that soon, as Weatherford had reached a level of familiarity with players in the market, and was on the verge of securing a contract, it made it clear that it had no intention to follow the parties’ agreement or complying with Nigerian content requirements.

Specifically it submitted that Weatherford insisted that it will only pay Ofserv Nig. a commission and would not allow it to use its own tools or personnel.

The plaintiff further alleged that Weatherford’s actions made it lost approximately 200,000 Nigerian man-hours and over $25million potential lost in-country revenue for the oil & gas sector. It therefore prayed the court for an injunction restraining Weatherford from executing the Sterling contract to the exclusion of Ofserv; equitable compensation to Ofserv on the basis of equity generated by the induced partnership and/or damages incurred by Ofserv as a consequence of Weatherford’s actions.

It argued that a key requirement of the Act is for foreign companies to deliberately impart skills to local firms and personnel through pre-implementation training and on-the-job learning (i.e. inclusion of local personnel in project implementation), wondering why Weatherford is acting to the contrary.

In its motion requesting to dismiss the plaintiff’s suit, Weatherford International argued that Ofserv Nigeria Ltd did not seek the leave of court, which is precedent before issuing the court process meant to be served on the defendant outside jurisdiction.

It stated that the writ of summons by the plaintiff is “void  ab-initio  having been issued without the leave of court first sought and obtained for the issuance and service of the writ of summons on the defendants outside the jurisdiction of this honourable court.”

It further submitted that the plaintiff, “being neither a law enforcement agency nor a regulatory authority in the oil and gas industry, lacks the  locus standi  to institute this action and has no right under the Act capable of being protected or enforced by private litigation as sought in this suit,” it added. To this end , it urged the court to discountenance the suit filed by the plaintiff.

 

– Vanguard

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