By Bassey Udo
After 24 years of operating in Nigeria as the Production Sharing Contract (PSC) contractor and partner with the Nigerian National Petroleum Company (NNPC) Limited, Addax Petroleum on Tuesday took its exit from the country.
With the decision to exit Nigeria’s oil and gas industry, Addax Petroleum ceased to be the PSC contractor for the Oil Mining Leases (OML) 123/124 and OMLs 126/137.
At a brief settlement and exit agreement signed in Abuja, Sinopec’s Addax Petroleum Development (Nigeria) said it was transferring its rights in four major oil mining blocks and assets in the country to the NNPC.
“@nnpclimited and Addax Petroleum Development (Nigeria) Ltd today,”
“Earlier today, after fulfilling closing obligations, the NNPC Limited and Addax Petroleum Development (Nigeria) Ltd signed a Memorandum of Understanding (MoU) to amicably terminate their 24-year Production Sharing Contract (PSC) relationship as well as the Transfer, Settlement and Exit Agreement (TSEA) for Oil Mining Leases (OML) 123/124 and OMLs 126/137,” the NNPC Limited announced through official Twitter handle on Tuesday.
To symbolize the amicable termination of the relationship, the closing documents and agreement were signed on behalf of the two parties by the NNPCL Chief Finance Officer, Umar Ajiya, who represented the NNPC’s Group CEO, Mele Kyari, while the outgoing Managing Director of Addax, Yonghong Chen, signed on behalf of the company.
The PSC for the oil 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.
In 1998, NNPC again signed another PSC with Addax on the operation of the oil blocks, which Addax Petroleum operated for another 24 years.
In April 2021, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revoked Addax’s operating rights in the four oil mining licenses, citing the company’s inability to comply with set production targets, although President Muhammadu Buhari in his capacity as the Petroleum Minister later ordered the reversal of the decision and restored the right by three weeks.
NNPC’s GCEO, Mele Kyari, said the decision to transfer the Addax Petroleum operating rights in the four OMLs to the NNPCL would boost the production of crude oil from the assets for the benefit of all 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,” Kyari said at the agreement signing and handing over ceremony.
“We believe that we have delivered on the mandate given to us by the government to take over these assets as expected. There have been ongoing engagements with the FIRS and this is in line with the approvals that we have received from the relevant authorities.
“From today, we expect operations from the assets to take off immediately and we will restore production, ensure all governance requirements as we proceed. We will 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,” Kyari said.
