Between Samsung workers and LADOL

It was four weeks ago. A scanty crowd of workers carried out a protest in front of the Lagos office of the Department of Petroleum Resources, DPR. Their grouse was with Lagos Deep Offshore Logistics, LADOL. But they work for Samsung Heavy Industries, SHI. So, why would any group of workers leave where they collect their salaries to protest against another company without inscriptions of their names anywhere?

This is the intricate story of SHI and LADOL partnership.

An alliance that held immense and historic possibilities, the LADOL/SHI partnership, at infancy, was chequered, perhaps, by acute infidelity to contract. This inconstancy became a bad omen of things to come. The protesting workers fate is one of them. By the action of their protest however, they seemed, sadly to be treating the effect of a problem. But the cause actually is their headache. They therefore need to dissect the root cause of their problem to be sure they are not mere pawns in the hands of a cynical corporate player.

So, what was the grumble of SHI’s workers? What do they want? They say they are about to lose their jobs at SHI because of an alleged termination of a sublease agreement that SHI Mega Construction and Integration Free Zone, SHI MCI-FZE, had with LADOL. They therefore want the quick intervention of DPR as the regulator of the oil and gas sector in order to save their jobs. They are of the opinion that LADOL’s purported action, that is the termination of the sublease contract, poses a threat to Samsung’s continued operation in the zone and by extension the source of their livelihood. In fact, Samuel Samidotun, the Assistant Manager, General Affairs department at SHI considers LADOL’s alleged act arbitrary and wants DPR’s strong intervention to resolve the lingering dispute.

However, there are close observers of the SHI/LADOL partnership since their parts intersected in 2010 and culminated in a partnership that won the bid for Total’s Egina Floating Production Supply Offloading, FPSO, with LADOL as the Local Content Partner, a partnership that SHI needed as the law required for that success to happen.

Two of these observers who preferred to be anonymous, did not share the sentiments of the protesting SHI’s workers. As one of them put it, the fate of SHI’s workers lies in SHI’s wry, double-edged approach to the partnership with LADOL. “They were not transparent; every step they took seemed to show a mindset to short-change LADOL and possibly edge them out of the partnership. Did you not read of all the issues Samsung created when the whole thing just started and how it terminated the agreement unilaterally as if there are no laws in this country”. He added; “You must have heard of the outcome of the Senate Public hearing on the FPSO. It has been revealed that some US$214 million paid by Total for the upgrade of the fabrication and integration facilities at LADOL was hidden by Samsung and still they made LADOL to cough out some good money for the facilities while losing a lot of their shares.

So, what I am trying to say is that if Samsung had started the whole business in good faith, this issue of termination of their sublease agreement would not have arisen. It would have been a matter of simple discussion and an agreement easily reached”, he concluded.

LADOL has however come out to debunk the clams of both SHI’s protesting workers and some publications it alleged were sponsored by SHI. According to the logistics company, its affiliate, Global Resources Management Limited, GRML, terminated SHI MCI-FZE’s sublease on September 5, 2018 for three reasons, “First remedied and material breaches of lease covenant. Second, denial of its landlord’s title by inter alia asking the Nigerian Ports Authority, NPA, the head lessor, to carve out a part of GRML’s leased land and grant a direct lease in favour of SHI MCI-FZE, so that SHI MCI-FZE could deal directly with all government regulators without needing to go through GRML or the Zone Management”. LADOL added that although GRML’s sublease agreement provided for upward only rent review, SHI MCI-FZE, in anticipation of NPA’s approval of a direct lease in its favour made several statements at various government agencies affirming its decision to unilaterally crash its rent from US$70 per square meter to US$5 per square meter (a reduction of more than 90%) on the expiry of its sublease in June 2018.

For GRML, SHI MCI-FZE’s renunciation of the upward only rent review was an anticipatory breach of the sublease contract. It was therefore left with no choice but to terminate the contract since it was, in any case, entitled to do so as a matter of law.

But the LADOL Zone management understood the pivotal importance of the Egina FPSO as a strategic national project with regard to Nigeria’s local content and technology transfer quest. And so when Samsung’s operating license was about to expire the first time, it granted SHI MCI-FZE a two month license extension on July 2, 2018, to enable Samsung complete its work on the Egina FPSO. Job completed, the Egina FPSO sailed away on Sunday, August 26, 2018, to the Egina oil field in OML 130. And at midnight on September 2, 2018, the two month extension of SHI MCI-FZE’s operating license expired. Since SHI MCI-FZE did not renew its operating license and did not indeed meet the conditions for renewal such as payment of license fee, provision of information and documents requested by the Zone Management in addition to failure to pay all outstanding amounts and fees, SHI MCI-FZE’s license could not be renewed. And so everything about LADOL/GRML and SHI MCI-FZE came effectively to an end.

So, you ask, why were the SHI MCI-FZE workers protesting, what were they protesting for, and why are they blaming LADOL over their fate?

Another close observer of the LADOL/ SHI MCI-FZE face-off provided an answer. In his words, “Those workers need to go back to their organization and seek audience with their employers. So, the summary of what I am saying is that Samsung should call his workers back to its office and sort out their issues. They should be open to their staff and tell them in truth that their business with LADOL is over”.

Zik Zulu Okafor wrote from Lagos.