The Nigerian National Petroleum Company (NNPC) Limited on Tuesday announced it has signed a settlement and exit agreement with Sinopec’s Addax Petroleum Development (Nigeria) to exit its four major oil mining blocks in the country.
With this agreement, according to NNPC Limited, Addax has ceased to be the Production Sharing Contract (PSC) contractor for the Oil Mining Leases (OML) 123/124 and OMLs 126/137.
The NNPCL Chief Finance Officer, Umar Ajiya, signed the agreement on behalf of the company, while the Managing Director of Addax Petroleum, Yonghong Chen, signed on behalf of his company. The signing of the agreement took place at the NNPC headquarters office in Abuja.
“Earlier today, NNPC Limited and Addax Petroleum Development (Nigeria) Ltd signed a Memorandum of Understanding (MoU) on the Transfer, Settlement and Exit Agreement (TSEA) for Oil Mining Leases (OML) 123/124 and OMLs 126/137,” the state oil firm said on its official Twitter page on Tuesday.
The PSC for the blocks was initially signed in 1973 between NNPC and Ashland and was terminated after 25 years.
Addax took over ownership of the four OMLs after the NNPC terminated its contract with Ashland in 1998.
Again, in 1998, the NNPC signed another PSC with Addax on the blocks and operated through Addax Petroleum for another 24 years.
In April 2021, Nigeria’s oil regulator revoked the four oil mining licenses, citing the company’s inability to comply with targets, but the decision was restored by President Muhammadu Buhari three weeks later.
The Group Chief Executive Officer of the NNPC Limited, Mele Kyari, said the Addax transfer would boost the production of crude oil from the assets for the benefit of Nigeria.
“We have worked with all our regulatory agencies, the FIRS, the FCCPC, NUPRC and all other agencies of government to arrive at what we have today,” Mr Kyari said.
“We believe that we have delivered on the mandate given to us by the government to take over this asset and as expected. There have been ongoing engagements with the FIRS and this is in line with the approvals that we have.
“From today, we expect the asset to take off immediately and we will restore production, ensure all governance requirements and as we proceed and also maintain the confidence of workers in this company in line with the commitment that we have, there will be no disruptions in the operations of this company.
“Lastly, I know that the team in NNPC and Addax have done great work to arrive at what we have today. Today, we see the exit of our partners and we hope they stay with us in Nigeria because Nigeria is a good place to invest,” he said.
Bala Wunti, head of NNPC’s subsidiary National Petroleum Investment Management Services, said this is the first time in the history of the hydrocarbon production journey that a PSC asset is being reverted to the concessionaire from a contractor.
“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,” he said.
“We have 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,” Mr Wunti said.
The event was attended by the Chairman of the NNPC Board, Margary Okadigbo, the Group Chief Executive Officer, Mallam Mele Kyari while the Executive Vice President, Upstream, NNPC Limited, Adokiye Tombomieye, the Chief Upstream Investment Officer of the NNPC Upstream Investment Management Services, 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, Yonghong Chen.
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