Saipem secretly plots Nigerian local content exclusion on NLNG Train 7

• Creates system in Milan which splits Nigerian 100%‭ ‬scope of work for non-cryogenic packages
• Insists non-cryogenic materials to be imported 100%‭ ‬against approved vendors list‭, ‬NCD plan on materials
• Lot 1‭ ‬for OEM products with minor value package items for Nigerian vendors

Grave evidences have emerged in a mind-boggling calculated exclusion of Nigeria Content (NCD) in the construction of the $7 billion Nigeria LNG Train 7 by Milan, Italy-based Saipem, core investor in the project, Business A.M. can report authoritatively.

A well knowledgeable source in Milan who is versed with operations of Saipem on the Train 7 project told our newspaper that Saipem does not intend to get major package items and major value for Nigerian vendors on the project.

Saipem are core investors on the Train 7 project, accounting for $4 billion of the total cost. The project is being developed by a Saipem, Chiyoda and Daewoo Joint Venture (known as SCD JV).

“What I have seen developing here (Milan) is that Saipem do not by any means wish Nigeria well especially on the Train 7 Project. The approved vendors list and the Local Content plan is clear on materials,” one of our sources said.

Business A.M. was told exclusively by the source, who belongs to a very knowledgeable global Nigerian expert oil, gas and power forum, that: “All non-cryogenic materials such as Air coolers, Gas Compressors and associated materials, Gas Turbines, Electric Heat Exchangers, Flares, Diesel Generator, various classes of Valves, Metering System, Cooling Water Chilling Package and other related materials are to be imported 100% by Nigerian Vendors.”

But in a rather bizarre twist, Saipem is now believed to have created a system in Milan, where they have split Nigerian 100% Scope of Work for packages that are completely non-cryogenic. “Packages like non cryogenic Valves, Heat Exchangers, Pumps, Air coolers and other package which are 100% non-cryogenic have already been broken down into Lots 1 and 2.

“Examples: Using Lot 1 for the OEM products with minor value package items for Nigerian Vendor, and Lot 2 for direct Purchase Order (PO) from Milan office to OEM with major package items and major value, a 90:10 ratio; all with same OEM for same product line originally meant to be imported by a Nigerian vendor 100%,” he further disclosed what Saipen has been getting up to back in Italy against the Nigerian LNG project.

According to international gas value-chain and LNG experts who spoke with Business A.M., the development at Saipem with respect to Train 7 explains why Nigerian companies (especially in downstream sector of the oil & gas industry), can never ever grow, because the international players “are allowed to poke their fingers into Nigerians’ eyes and call their bluff”.

They queried the role of the Nigeria Content Development Monitoring Board (NCDMB) in monitoring the implementation of the Nigerian Content in the ongoing Train 7 project. “If NCDMB cannot monitor the implementation of Nigeria Content in Train 7, then how would the expected 10,000 jobs be created on the project? It’s a total thrash and mess,” one of the gas value-chain expert analysts wondered aloud.

“I worked in Brazil years back, and their Local Content Model is unmatched, no nonsense. Saipem must not be allowed to touch any non-cryogenic materials meant for Nigerian Vendors. How can a Nigerian company, which is meant to quote for 100% value, be quoting less than 10% of the whole package value? This is absolute wickedness. I don’t believe this is happening in today’s contemporary O& G industry. Everything should be done to stop this, and save Nigeria and Nigerians from endless deprivation and poverty,” the international oil & gas expert said.

When Business A.M. put this to the Nigeria Content Development Monitoring Board headed by Simbi Kesiye Wabote, we were told they will be looking at it, and will be able to come out with a statement.

Indeed, we have it on good authority that a meeting has been scheduled for this week for the Wabote and his team to look at the issues especially Saipem’s plan to scheme Nigerian vendors out of the local content aspects of LNG Train 7 execution.

At the NLNG, who are client to the project, Business A.M. was told that the organisation would study the allegations in order to come up with a response.

Exclusion of Bonny host communities’ contractors

Earlier in March, the ruling royal houses of Bonny Kingdom, the island core host to Train 7, had raised similar accusations against Saipem, Chiyoda, Daewoo JV over alleged non-compliance with the core host’s participation under the Bonny Kingdom Local Content Compliance Committee (BKLCCC) in the construction of the multi-billion-dollar project.

The BKLCCC railed Saipem and its JV partners handling the Engineering, Procurement and Construction (EPC) of the Train 7 of decidedly side-lining its (BKLCCC) selected contractors for local participation in the kickstart of the project’s early works and tie-in.

The committee alluded to a developing ‘divide and rule tactic’ being dangerously employed by Saipem (SCD JV). It visited and opened project take-off talks with only one out of the 35 ruling houses of the Bonny Kingdom presided by the Amanyanabo. This forced all the ruling houses to jointly pull out of talks with the NLNG/SCD JV, accusing the latter of attempting to divide the kingdom’s centuries’ old traditional federal system called Bonny Chiefs’ Council (BCC). “We can only return to negotiation when NLNG/SCD JV understands how to treat us as one united entity, and BCC had received further directive from its appointing authority, the Amanyanabo-in-council,” they said.

The BKLCCC operates in tandem with the Nigeria Content Development Monitoring Board (NCDMB), and was constituted by Edward Asimini William Dappa Pepple III, the king, Amanyanabo, Natural Ruler and Perekule XI of Bonny Island Kingdom. The monarch lamented that more than a year after he submitted the list of local contractors to the NCDMB to participate as local content of the NLNG’s Train 7, he was yet to receive a feedback on the approved list of contractors.

Saipem’s delay in reverting to BKLCCC further lays credence to our Milan source’s lead of the company’s decision to undermine the Nigerian Content law on Train 7.

“We wonder where the NLNG and its contractor, SCD JV intends to source local contractors from. It is a thing of worry because for one year and four months since the BKLCCC sent in its list of indigenous contractors and their partners to NLNG for verification, more than half of the companies on the list are yet to be contacted to upload their documents for verification; and till date no verified list of indigenous contractors and their partners has been forwarded to BKLCCC and SCD JV,” the Amanyanabo Pepple III had said in March.

Amaopusenibo Opuada Willie-Pepple, chairman of BKLCCC says NLNG/SCD JV appears to be stoking crisis in its host community by attempting to pitch certain sections of the community against the other, thereby engender an internal crisis in the island kingdom. “We know that NLNG has made some positive contributions in Bonny Kingdom but that was achieved because they adhered to existing constituted traditional authority in Bonny Kingdom. Presently they seem to want to create disunity in our kingdom. They want to see us fight and kill one another, but that will never happen,” he said.

In a reaction then, Eyono Fatayi-Williams, general manager, external relations and sustainable development, denied all BKLCCC’s claims. She said NLNG holds the Bonny monarch in high esteem, and would not act in any manner to denigrate him or his office. “NLNG states for the record that it holds the King of Bonny, His Majesty, King Edward Asimini William Dappa Pepple III, JP, CON Perekule XI, Amanyanabo & Natural Ruler of Grand Bonny Kingdom, a respected first-class traditional ruler in Rivers State, in high esteem and maintains very cordial relationships with the King and Bonny Kingdom. The Company considers the community as a trusted partner, and remains committed to the unity of the Kingdom,” Fatayi-Williams had said in a statement.

According to her, the local content development was at the core of NLNG’s drive to successfully deliver its Train 7 project, and that NLNG would continue to engage the community in its efforts at implementing the project in a peaceful and beneficial way to Bonny Kingdom. “Sustainable development of Bonny Kingdom and local content development remain at the core of the Train 7 Project. NLNG is fully committed to delivering the Nigerian Content Plan of the project, in partnership with the Nigerian Content Development and Monitoring Board (NCDMB), in line with its vision to help build a better Nigeria. NLNG will continue to engage the leadership of the Kingdom in its desire to ensure the successful execution of Train 7 Project in a manner that is both peaceful and beneficial to Bonny Kingdom, Rivers State and Nigeria,” said the NLNG spokesperson.