Nigerian oil firm battles IOC over alleged breach of local content law

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An indigenous Nigerian energy firm, Ofserv Nigeria Limited, has sued Weatherford International and its Nigerian affiliate, Weatherford Nigeria Limited, for alleged breach of trust and abuse of the provisions of the Nigerian Content law.

In its statement of claims filed before the Federal High Court, Lagos, and made available to PREMIUM TIMES, Ofserv claimed Weatherford manipulated the Nigerian content law with a view to gaining illegal entrance into the Nigerian oil drilling services market.

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Chief Executive of Ofserv, Dimeji Bassir, accused Weatherford of luring his company into a joint business partnership to provide oil drilling services in the Nigerian oil industry when it knew it was not committed to the terms of the agreement.

Joined in the suit are President Muhammadu Buhari, who doubles as the Minister of Petroleum Resources, and the Nigerian Content Development and Monitoring Board (NCDMB), the agency that monitors compliance with local content policy in the oil and gas industry.

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Mr. Bassir said based on the requirements of the Nigerian Oil & Gas Industry Content Development Act 2010, Ofserv had approached Weatherford in December 2014 to set up partnership to pursue a technical tender for drilling services contract with Shell Nigeria.

Section 2 of the Act requires exclusive consideration for Nigerian indigenous service firms with demonstrable technical capacity to bid for drilling services on land and swamp areas or in partnership to jointly exploit the Nigerian drilling services market.

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Encouraged by the Nigerian Content policy to increase indigenous participation in the oil and gas industry, Mr. Bassir said Ofserv had invested significant resources between December 2014 and June 2015 to facilitate the success of the partnership with Weatherford and its smooth entrance into the Nigerian drilling services market.
Based on the memoranda of understanding with Weatherford, Mr. Bassir said Ofserv had invested a about $24million of private resources in the development of in-country capacity by acquiring key equipment, attracting and training quality local personnel to operate them.

An indigenous Nigerian energy firm, Ofserv Nigeria Limited, has sued Weatherford International and its Nigerian affiliate, Weatherford Nigeria Limited, for alleged breach of trust and abuse of the provisions of the Nigerian Content law.

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In its statement of claims filed before the Federal High Court, Lagos, and made available to PREMIUM TIMES, Ofserv claimed Weatherford manipulated the Nigerian content law with a view to gaining illegal entrance into the Nigerian oil drilling services market.

Chief Executive of Ofserv, Dimeji Bassir, accused Weatherford of luring his company into a joint business partnership to provide oil drilling services in the Nigerian oil industry when it knew it was not committed to the terms of the agreement.

Joined in the suit are President Muhammadu Buhari, who doubles as the Minister of Petroleum Resources, and the Nigerian Content Development and Monitoring Board (NCDMB), the agency that monitors compliance with local content policy in the oil and gas industry.

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Mr. Bassir said based on the requirements of the Nigerian Oil & Gas Industry Content Development Act 2010, Ofserv had approached Weatherford in December 2014 to set up partnership to pursue a technical tender for drilling services contract with Shell Nigeria.

Section 2 of the Act requires exclusive consideration for Nigerian indigenous service firms with demonstrable technical capacity to bid for drilling services on land and swamp areas or in partnership to jointly exploit the Nigerian drilling services market.

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Encouraged by the Nigerian Content policy to increase indigenous participation in the oil and gas industry, Mr. Bassir said Ofserv had invested significant resources between December 2014 and June 2015 to facilitate the success of the partnership with Weatherford and its smooth entrance into the Nigerian drilling services market.
Based on the memoranda of understanding with Weatherford, Mr. Bassir said Ofserv had invested a about $24million of private resources in the development of in-country capacity by acquiring key equipment, attracting and training quality local personnel to operate them.

As a result of the supposed partnership, Mr. Bassir said Ofserv spent another $6million on proprietary drilling market research data and pricing intelligence handed over to Weatherford.

He said the company was shocked to find out later that Weatherford’s real intention was “to exploit Ofserv’s capacity and use its proprietary data cheaply to gain entry into the Nigerian drilling services market and evade the NOGICB Act”.

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Mr. Bassir said Weatherford had relied on Ofserv’s proprietary data, market intelligence and local presence to bid for and get a contract award from Sterling Oil Exploration and Energy Development Company Limited in defiance of agreed partnership structure.

Rather than a true partnership as agreed in the execution of the contract, Mr. Bassir said Weatherford merely mentioned Ofserv as a commission agent, without any opportunity for it to use its tools or personnel to execute it in a joint scope.

“Any attempt to exclude Ofserv from substantive participation in any area of the Nigerian oil and gas industry exclusively reserved for indigenous-owned and controlled companies are in substantial violation of the Nigerian Content law,” Mr. Bassir told PREMIUM TIMES.

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Apart from compensation for $32.1million as damages for lost work/profit and other costs from Weatherford, Ofserv asked the court to declare Weatherford’s entry into the Nigerian drilling market a violation of the NOGICB Act.
Besides, the company asked the court to disqualify Weatherford from bidding for, or participating in any further contracts in Nigeria, while the Minister of Petroleum Resources and NCDMB should be restrained from approving any Nigerian Content partner for the company.

When contacted, Country Manager, Weatherford Nigeria, Femi Akarakiri, acknowledged the existence of a dispute with Ofserv, but expressed surprise that Mr. Bassir has rejected overtures for a peaceful resolution and chosen to embark on “campaign of calumny” in the media.

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“We truly have a dispute,” Mr. Akarakiri told PREMIUM TIMES on telephone on Wednesday. “I have reached out to him (Bassir) for amicable resolution, because there appears to be a bit of misunderstanding about the agreement we had together.

“He (Bassir) claims he introduced Weatherford to Nigeria, but this is a company that has been in Nigeria since 1975. Unfortunately that’s the limit I can discuss with you on the matter. In any relationship, there is bound to be misunderstanding and people sit down to resolve it.

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“But, the next thing I heard was that he (Bassir) went to court, and I said fine, let the judge decide for us to see whether he even has the basis to sue us. So, we said let’s have our day in court and enjoy ourselves.”  The NCDMB spokesperson, Obinna Ezeigbo, asked for some time for appropriate officials in the agency to react to the claims in the documents.

Article taken from Premium Times on the 10th of June @ 12:13PM, written by Bassey Udo

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