OpeOluwani Akintayo
Lagos — Chinese company, Addax Petroleum, has lost control of its Nigerian assets – Oil Mining Leases, OMLs, 123, 124, 126 and 137 – SweetcrudeReports has confirmed.
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, NURPC, Gbenga Komolafe, on Thursday said the firm lost the oil assets previously held under Production Sharing Contract, PSC, with the Nigerian National Petroleum Corporation Limited, NNPC, because it failed to meet renewal payment deadline, among other reasons.
According to him, by law, the award had lapsed and had been automatically returned to the NNPC, which operates Nigeria’s stakes in such petroleum contract sharing.
“The status of the Addax Petroleum award is that right now the awardees have not been able to meet their obligations in line with the provisions of the award.
“And by the operations of the law, the award stand elapsed and it’s automatically reversed to the NNPC, that is the status as for now,” he explained.
SweetcrudeReports on Thursday reported that a Federal High Court in Lagos had asked the NNPC to stop crude oil allocation to the firm, although Addax said it had appealed the ruling.
With the development, NNPC is required to search for new partners to explore the oilfields in a fresh production sharing arrangement.
Addax had been enmeshed in controversies regarding the oil fields since March, 2021.
At the time, the defunct Department of Petroleum Resources, DPR, had explained that the licences were revoked due to the non-development of the assets by the oil firm, leading to the company’s inability to comply with the work programme targets.
The then Director of the regulatory agency, Sarki Auwalu, had said over 50 per cent of the assets were underdeveloped.
According to him, the situation was resulting in loss of the badly-needed revenue to the federal government.
“The first reason for a revocation is when you discover that the asset is not being developed according to the business guidelines because it is economic sabotage,” he had stated.
The regulatory agency which has now metamorphosed into the NURPC then awarded the OMLs to Kaztec Engineering Limited/Salvic Petroleum Consortium.
But, President Muhammadu Buhari overruled the ministry of petroleum and the DPR, thereafter ordering the restoration of the leases to Addax Petroleum, which was in production sharing contract with the NNPC.
The decision to return the assets to the Chinese firm, according to a statement signed by the Senior Special Assistant on Media and Publicity, Garba Shehu then, was in line with the administration’s commitment to the rule of law, fairness and enabling a stable business climate for investment.
While directing the DPR to retract the letter of revocation of the leases, the president had also asked the NNPC to utilise contractual provisions to resolve issues in line with the extant provisions of the Production Sharing Contract arrangement between the corporation and Addax
The decision by Buhari was based on the strength of a letter written to him by the NNPC on April 20, 2021, arguing that the revocation of the oilfields would have implications on the Nigerian economy and the diplomatic relationship between Nigeria and China.
The NNPC had warned the president that the revocation, if unresolved, would create an unprecedented level of contingent liability of well over $1 billion for NNPC as the party in contract with Addax as well as reputational damage to the country.
The NNPC had then written: “Addax has not been investing in capital projects, development drilling, and exploration activities due to dispute on applicable fiscal terms on its blocks.”
The corporation had reminded the president that China was providing financing for key infrastructural projects like the railways projects and the Abuja-Kaduna-Kano Gas Pipeline Projects, amongst others, and warned that the revocation action could also threaten the realisation of these critical projects.
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