Addax Petroleum has exited four Nigeria oil blocks OMLs 123/124, 126/137 as the Nigerian National Petroleum Company Ltd on Tuesday signed a Memorandum of Understanding (MoU) on the Transfer, Settlement and Exit Agreement(TSEA).
By the agreement, the protracted dispute on the blocks operated by Addax, has finally been resolved thus charting a course for much-needed investment and growth on the oil blocks.
The NNPC Ltd Chief Finance Officer, signed the agreement on behalf of the NNPC, while Mr Yonghong Chen, Addax MD signed for his company.
With this agreement, Addax has ceased to be the Production Sharing Contract (PSC) contractor for the asset.
The PSC for the blocks was initially signed in 1973 between NNPC and Ashland and terminated after 25 years.
Again, the NNPC in 1998 signed another PSC with Addax in 1998 on the blocks and operated through Addax Petroleum for another 24yrs.
The oil leases were in April 2021 revoked by the petroleum regulator which accused Addax of failing to develop them sufficiently, but the decision was overturned by President Muhammadu Buhari three weeks later.
However, on 25th January 2022, NNPC Limited commenced formal engagements with Addax and NUPRC, followed by a series of meetings to ensure a swift closeout of the exit discussions and formalities.
The exit agreement is expected to boost both commercial and diplomatic relations for Nigeria and China.
Speaking during the agreement signing in Abuja on Tuesday, Kyari said the deal would boost the production of crude oil from the assets for the benefit of Nigeria.
Kyari said the NNPC Ltd has assembled a Transition Management Team to manage oil production and develop the gas potentials of the
acreages.
In his address at the close-out and signing ceremony, the NNPC GCEO charged the Transition Management Team to hit the ground running towards restoration and fulfilment of the promise of the Assets.
He added that readjustment is expected to be swift and efficient, and there will be no excuses for production losses/deferment as NNPC Ltd has proven that it is ready to provide all the necessary support required.
Due to the multiplicity of challenges witnessed by the Assets over the years, most especially in the recent past, they(combined) are currently producing an average of 6,000 BOPD.
But with good asset management in place, he said a production increase of 10,000 BOPD is expected before the end of the year, and total production is expected to be doubled in 2023.
He described the pact as another laudable achievement by NNPC Ltd that is set to deliver
additional value to the nation through increased oil production and gas monetization from the resource-rich acreages.
In his remarks, Ajiya said that with the signing of the agreement, NNPC has kept its words as a reliable company.
He said, “All due process has been followed leading to the drafting and the issuance of this final version of the Addax settlement transfer and exit agreement.
“All required approvals including NNPC’s Board of Directors approval have been obtained and all necessary approval from the regulator the NUPRC, FCCPC, as well as the Office of the Attorney-General has been secured.
“And therefore, the only issue at the moment that has not been disclosed is the reconciliation with the Federal Inland Revenue Service and which is also ongoing and we assure our brothers in Addax that this process will come to a close as quickly as possible.”
On his part, Wunti said this is the first time in the history of hydrocarbon exploitation that a PSC asset is being reverted back to the concessionaire from the contractor.
He said, “With the exit upon signing, We are going into a physical transition in which the asset operatorship will be transferred to us in a very prudent manner.
“We already agreed on a transition framework. That transition framework will begin immediately.
“We believe immediately we sign this in another two weeks, we should be able to bring back and immediately restore about 10,000 barrels and that will be a stage that will set more incremental production. This wouldn’t have been possible without this signing,” he said.
The NNPC Board Chairman, Mrs Margary Okadigbo, the Group Chief Executive Officer, Mallam Mele Kyari attended the agreement signing virtually while the Executive Vice President, Upstream, NNPC Limited Mr. Adokiye Tombomieye; the Chief Upstream Investment Officer of the NNPC Upstream Investment Management Services, Mr Bala Wunti; the Chief Finance Officer of NNPC, Umar Ajiya; the Executive Commissioner, Development and Production, Nigerian Upstream Petroleum Regulatory Commission, Dr Habib Nuhu; and the Managing Director, Addax Petroleum, Mr Yonghong Chen attended the event physically.
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