One of Nigeria’s largest social accountability movement, Connected Development (CODE), has made a public outcry to the Federal Government not to ignore corrupt activities of foreign companies in Nigeria.
CODE’s public outcry came after a $3.8 billion Floating Production Storage Offloading (FPSO) unit built by Samsung Heavy Industries (SHI) for the 200,000 barrels per day capacity Egina oilfield began to sail to the oilfield.
The South Korean shipbuilder, had in 2017, confirmed that Total’s Egina FPSO sailed away from its Geoje shipyard, heading to Nigeria.
The FPSO, operated by Total, is 330 meters in length, 61 meters across and 34 meters high, with a storage capacity of 2.3 million barrels of oil.
How the Engina FPSO project tend to operate
The project is under the Nigerian local content regulations, and a portion of the topsides fabrication and integration was expected to be completed in Nigeria.
SHI had earlier formed a joint venture (SHI-MCI) with a Nigerian local company and established a production facility in Lagos, Nigeria to meet the local content requirements.
Following completion, the FPSO will be moored at the Total-operated Egina oil field, located some 130 km off the coast of Nigeria at water depths of more than 1,500 meters.
Apart from the FPSO, infrastructure on the field will consist of an oil offloading terminal, and subsea production systems that will include 52 kilometers of oil and water injection flowlines, 12 flexible jumpers, 20 kilometers of gas export pipelines, 80 kilometers of umbilicals, and subsea manifolds.
Allegations surrounding SHI
In June, 2013, NNPC and Total awarded the contract to build the $3.8 billion Egina FPSO to SHI despite the fact that Hyundai Heavy Industries was recommended by Total for the project and was the lowest bidder.
Young professionals have taken to Twitter to make a trend #EndJobsExportNg in which CODE fully participated in. They are alleging that since the award of the contract to Samsung, the company has collected hundreds of millions of variations of 20% of Contract value, with no local content in it.
It was alleged that the shipbuilder paid bribes in the region of $50 million to win the Egina FPSO contract.
The young professionals and CODE, alleged that SHI has clearly used bribes in the Egina project to minimize its use of local content. The further made the disclosure that SHI had succeeded in diverting hundreds of millions of dollars in variations to South Korea.
It is on the strength of the foregoing that CODE sought the mandate of the following by the presidency:
- A thorough investigation of the irregularities surrounding the Samsung Heavy Industries (SHI) and Samsung Korea, and their involvement in the Egina FPSO Project.
- That for every variation claimed by Samsung, the company is made to pay a minimum of 20% to Nigerian companies involved in the Egina contract.
- SHI Korea be given the maximum fine applicable for local content violations that is 5% of their contract sum.
- That Samsung Heavy Industries Korea and Samsung Heavy Industries Nigeria be blacklisted from participating in Nigerian projects for 10 years.
- All the local content in the Egina FPSO contract be fully implemented, as per the contract.
SHI is one of the largest shipbuilders in the world and one of the “Big Three” shipbuilders of South Korea.
The core subsidiary of the Samsung Group, South Korea’s largest conglomerate, focuses on the engineering, procurement, construction, commissioning and the delivery of -transportation ships for the commercial industry, topsides modules, drilling and floating production units for the oil and gas sector, gantry cranes for fabrication yards, digital instrumentation and control devices for ships, and other construction and engineering services.