Italian oil giant – Nigerian Agip Oil Company (NAOC) – is locked in a battle with Arco Group Plc., an indigenous oil servicing firm. The crisis may trigger shortage in gas supply nationwide as a major gas plant is threatened, reports Assistant Editor Seun Akioye.
It doesn’t require an expert to know that all is not well at the Nigerian Agip Oil Company (NAOC) gas plant in OB/OB Omoku, in Ogba, Egbema, Ndoni Local Government Area of Rivers State. From the entrance, one could see a giant gas flare being accompanied by a thick, black smoke from the three gas pipes in the plant.
Employees at the gas plant blamed the heavy black smoke and the unusual high flare on inadequate maintenance of the plant. For more than a year, the operation at the plant has been a subject of litigation. Locked in the legal tussle are: an indigenous oil and gas engineering company, Arco Group, NAOC and an engineering firm, Plantgeria Nigeria Limited. Plantegeria has strong Italian roots.
In 2006, Arco Group and its erstwhile partner, General Electric International Operations Nigeria Limited (GEION), won a contract in a Joint Venture involving the Nigerian National Petroleum Corporation (NNPC) and NAOC Limited to maintain the latter’s rotating equipment, gas turbines and machines at NAOC’s OB/OB, Kwale and Ebocha gas plants in Delta and Rivers states.
The initial contract ran from 2006 to 2011, with Arco responsible for the maintenance of the plants rotating equipment, including the turbines, the centrifugal and reciprocating compressor. The company was also mandated to do preventive, corrective maintenance and general overhaul. However, trouble began when both Arco and GEION were requested to submit a proposal. But, NAOC, a party to the joint venture deal, allegedly had other plans. It allegedly introduced a fresh company – Plantgeria – and decided to award the contract to it against the directives of the Joint Partners.
Between the law and an erring company
Arco instituted an action at the Federal High Court in Port Harcourt on January 27 against NAOC, joining the NNPC, NAPIMS and Conoco Philips Petroleum Nigeria Ltd as co-defendants. The plaintiff was seeking several declarative and injunctive reliefs against the defendants jointly and severally. It also urged the court to restrain the parties from “awarding or taking any step or steps to award to any person, company or firm, except to the plaintiff company, any contract whether designated as interim, stop-gap, 4+1 years or whatsoever described….for the maintenance of gas turbines and rotating equipment.”
In a string of retraining orders delivered June 30, the Presiding Judge, Lambo Akanbi, ordered “the parties to maintain the status quo” while adjourning the case to October 26. excited by the court’s order, counsel to Arco Group, Chief Wole Olanipekun, a Senior Advocate of Nigeria, (SAN), said “the judge has strengthened the key principle which ensures that the substance of a case in dispute remains intact until the case is disposed of to avoid destroying the major aspect of a matter after ruling had been obtained.”
But, Olanipekun’s excitment was not shared by all the parties as investigations by The Nation showed that NAOC, has blatantly flouted court order by going ahead to hire Plantgeria Nigeria Limited to take over the servicing of the gas plant.
It was learnt that on October 7, at the OB/OB plant in Omoku, ARCO worker were denied access into the processing gates of the plant by NAOC security and Plantgeria officials.
The Nation discovered that trouble started on July 7 when the Land Area Manager of OB/OB, instructed that Plantgeria would henceforth take over the maintenance of the gas plants, a directive that ran foul of a substantive court order, restricting all parties from further action on the matter.
“We were told that Plantgeria would now be managing the plant and we were restricted from the process gate. But because there is a court order asking that the status quo be maintained until the court decides on the case, we have been coming to work, but they didn’t allow us to touch anything. We are restricted to our base within the premises, whatever the court says when the matter comes up is what we will abide with,” an Arco official, who pleaded for anonymity said.
Threat to gas supply
Further investigations showed that, Plantgeria has been battling to maintain the gas plants since July. Some of its employees were seen moving around the plant and The Nation confirmed that the company has taken charge of gas maintenance at OB/OB. A source wondered why a company, with its primary expertise in auto mechanic, generator repairs and equipment leasing was could be hired for such technical job.
“But Plantgeria does not have the required expertise to handle the gas plants and they have been having a tough time. When we were in charge, we maintain at 97/98 per cent but what we have now since Plantgeria took over is less than 50 per cent. That is the reason for the black smoke and the huge flare that you see. It is not supposed to be like this,” a source said.
Though claim could not be independently verified, another source alleged that the community has not enjoyed electricity supply since July. It was learnt that the turbo generator, which generates power has not been serviced by Plantgeria. No official reason was given for this but many insisted that it was because the company lacked the expertise.
The poor management of the OB/OB gas plant has resulted in environmental problems for the community. Apart from the unbridled gas flare which further threatens the country’s efforts at mitigating climate change, the development has further dented iNigeria’s commitment to implementing the United Nations (UN) Strategic Development Goals (SDGs). The gas plant and many of the houses around it have blackened roofs and whenever it rains, black soot drops on water sources and homes of the residents.
This situation, it was learnt, has forced Plantgeria to poach Arco workers.
“We understand that NAOC told them to go and get Arco staff if they want to succeed. They have called for me and many of our staff to come and join them. They are offering juicy incentives but there is no way we would leave our company. They know we have the experience and expertise. We have successfully maintained this plant and the others even when the foreign companies abandoned the site due to militancy, we were here working,” a source within Arco Group said.
The OB/OB gas plant is strategic to Nigeria’s quest for a stable electricity supply, one of the cardinal promises of President Muhammadu Buhari. According to The Nation investigations, the OB/OB gas plant has an average capacity to produce 40,000,000 Metric Standard Cubic Feet (MSCF) of gas. The average monthly gas supply to Nigeria Liquefied Natural Gas Company (NLNG) Bonny is 28,000,000 MSCF.
“If you cannot maintain the plants properly and it results in a breakdown, whatever gains Nigeria has achieved in electricity generation and distribution will be affected and this will be against the plans of the federal Government,” Denis Ayisire, Arco’s company secretary said.
It was further gathered that NAOC may bar Arco workers from entering their own base inside the gas plant from October 20. This, according to sources, is to preempt the court ruling billed for October 26.
The disregard for court orders by the multinational oil companies will have dire consequences for indigenous companies, who are being muscled out of the sector by bigger players.
“Where is the local content law here which is supposed to protect an indigenous company like Arco? The disregard for court orders and impunity which is being carried out here must be checked because it has consequences for other indigenous companies in Nigeria. If this is allowed, then our country has shown that local companies do not have the support of their own government,” Ayisire said.
Arco currently has about 131 workers working on the gas plants and over 400 on its payroll. According to an employee, if the company loses the battle, what will happen to Nigerians with the required skills who will be thrown into the job market?
“We will be affected, our wives and children, the chain effect on the economy. What will be the lot of other indigenous companies in this sector and others? What is the rationale for pushing us out, we have been the ones doing the job and we have not been found wanting,” the source said.
When The Nation contacted the Corporate Affairs section of Plantgeria at the company’s headquarters on Danjuma Road, Trans Amadi Industrial layout, Port Harcourt, the company declined comment on the matter. “We do not attend to such enquiries,” the company said. Also efforts to get NAOC to comment were abortive, but in a previous interview, Taju Adigun, Manager, Government & Institutional Relations, said: “Why do you want to write about it. Are you aware the case is in court? The ethics of journalism as I know it stipulates you can’t write about a case already in court and I think you should know that.”
The fate of Arco and other indigenous companies in the face of fallout with a multinational company remained unknown. But as industry watchers have noted, this will be one case that will test the resolve of President Buhari on cleaning up the oil and gas industry and empowering competent indigenous firms.
