UK law firm, McGrigors, has advised on what is believed to be the first in a string of joint-ventures as international energy companies target lucrative oil and gas contracts in Nigeria.
Lawyers in the firm’s Aberdeen-based Energy team have advised Nigerian conglomerate, Jagal Group, on a deal which will allow it to join forces with Subsea 7, a global leader in seabed-to-surface engineering and construction and services.
The resulting joint venture, named NigerStar 7, will provide services to oil companies for large and complex projects in Nigeria.
McGrigors said the groundbreaking deal has come about partially in response to strict new legal requirements in Nigeria aimed at improving local involvement in the development of Nigeria’s oil and gas assets.
McGrigors partner, Roger Connon, who led the legal team on the deal, said that similar deals are expected in the coming months. He said: “The Nigerian authorities recently passed a law, The Nigerian Oil and Gas Industry Content Development Act, which is designed to enhance the level of participation of Nigerians and Nigerian companies in the development of the country’s oil and gas industry.
“What this effectively means is that only those companies with significant indigenous capital – human and otherwise – will be allowed to win licenses to operate on some very lucrative local contracts.
“The Nigerian government is trying to encourage partnership between local businesses and international providers which will ensure that expertise and resources are shared. This is likely to lead to a flurry of joint ventures as major international companies move quickly to secure partners of sufficient quality.”
Gemma Crawford, a senior solicitor based in the McGrigors Aberdeen office, added that the rush to sign deals is being held up as legal issues around corporate governance and anti-bribery programmes are considered.
She said: “The key for investors is to make sure that they retain sufficient influence within the corporate structure. They need to safeguard their own investment in the long term, but also ensure they adhere to these new Nigerian content rules.
“Business practices which might seem commonplace in the local market could land JV partners in trouble in their home market. Listed companies, for instance, are subject to quite specific requirements around corporate governance. Similarly, UK and US companies will be subject to tough anti-bribery legislation like the UK Bribery Act or US Foreign Corrupt Practices Act. This is leading to quite detailed discussions about the indigenous partners selected and compliance to limit risk.”
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