The Nigerian National Petroleum Company Ltd has successfully terminated the Production Sharing Contract with Addax Petroleum on four oil blocks.
The development marks the termination of Addax Petroleum’s relationship with OMLs 123/124, 126/137.
The NNPC Ltd said with the fulfilment of the closing obligations by the parties and effective January 31, 2023, Addax transfers the operatorship of OMLs 123/124 and 126/137 to Antan Producing Limited on interim basis through the transition period pending the emplacement of a substantive replacement PSC in compliance with the directive Mr President.
Engr. Sagiru Jajere, will be the Managing Director of Antan Producing Limited, the NNPC Ltd announced.
The Chief Upstream Investment Officer (CUIO), NNPC Upstream Investment Management Services (NUIMS), Bala Wunti, revealed this at the ‘Final Close-Out of the Addax Transfer, Settlement and Exit Agreement’ held at the NNPC Towers in Abuja.
Wunti noted that since NNPC’s takeover of the assets, oil output on the assets rose from 6000 barrels per day to 16,000pbd.
The exit was backed by the Presidency, Office of the Attorney General of the Federation, NUPRC, Federal Inland Revenue Service, Economic and Financial Crimes Commission, and the Federal Competition and Consumer Protection Commission.
The conflict was a threat to Federal Government’s bilateral relations with the Peoples Republic of China.
With the agreement, the protracted dispute on OMLs 123/124, 126/137, operated by Addax Petroleum, ended to allow needed investment in the oil block.
Group Photograph Of The NNPC Team Headed By GCO, Mele Kyari; Addax Team, Lead By The outgoing Managing Director of Addax, Yonghong Cheng
Nigeria initiated the Production Sharing Contract (PSC) for the oil blocks, initially signed in 1973 between NNPC and Ashland. It was terminated 25 years after.
A fresh PSC contract was initiated by NNPC with Addax in 1998 on the blocks and operated through Addax Petroleum for another 24yrs.
But Adex was faced with disputes and litigation which frustrated the PSC.
The discussions associated with the revocation of Addax license started in 2021, leading to the upstream industry regulator (NUPRC) advising the return NNPC Limited to allow amicable exit for Addax.
L-R: The outgoing Managing Director of Addax, Yonghong Cheng and GECO Of NNPC Ltd, Mele Kyari
The NNPC Ltd began a formal engagement with Addax and NUPRC on 25th January 2022, ensuring smooth exit discussions and formalities.
Speaking at the event, the Group Chief Executive Officer of the NNPC Ltd, Mele Kyari, said the termination of the Addax PSC marks a new dawn for the oil blocks.
He said the amicable settlement is a clear message to the world that Nigeria is willing to attract investments in the oil and gas sector.
Kyari said, “Today is a great day for us at the nnpc, we have drawn to a close a very very long dispute over the Addax Plc . Today it has been come to end as clearly directed by Mr President, NNPC in its wisdom has made sure that this amicable arrangement is in place so that we take over the operations of this assets and put up the necessary framework for the operation of this asset to be beneficial to the benefit of our country and to others.
“Of course, this is a message to the whole world that our country is a very reliable physical environment. We keep to our agreement and also as a country we are ready for business.
” We believe this closure will also further and soften the already cordial relationship between people’s Republic of China and Nigeria.”
Bala Wunti in his remark said before the Takeover of the assets, only two of the oild blocks were producing.
He said however that everything necessary have been done to ensure peaceful transferes of disputes as required by the terms of the agreement.
He said, “Out of this four OMLCs, two were producing. Since taking over of this assets, it Production has grown fron 6000barrels to 16,000 barrels combined fron the two assets and we have recorded zero downtime since then.
“This wouldn’t have been possible without the collaborative support of the Addax management.
“We have been able to achieve the technical component of the agreement. It involves transferring 179 that are required currently being used to operate Addax.
“That is excluding terms that says we will cancel them. We are transferring 81 cases and disputes at different levels.”
He noted that everything has been done to achieve the presidential mandate.
The outgoing Managing Director of Addax, Yonghong Cheng, said the agreement has “achieved a win-win outcome” adding that “This demonstrates the power of cooperation which has resulted in the restoration and the strengthening of the relationship between NNPC and Addax on one hand and our parent countries, Nigeria and China on the other hand.
“We have achieved this important milestone. This is good for all of us. I will like to thank His Excellency, President Muhammadu Buhari for his leadership on this issue and his support for foreign investors and also appreciate the management of NNPC Ltd and the leadership of the able GCEO, Mele Kyari, for his commitment and focus towards achieving this.”