In order to vacate its four significant oil mining blocks in the nation, Sinopec’s Addax Petroleum Development (Nigeria) and the Nigerian National Petroleum Company (NNPC) Limited announced on Tuesday that they had signed a settlement and exit agreement.
According to NNPC Limited Addax’s role as the Production Sharing Contract (PSC) contractor for Addax has ended as a result of this arrangement.
The agreement was signed on behalf of the business by Umar Ajiya, Chief Financial Officer of NNPCL, and Yonghong Chen, Managing Director of Addax Petroleum. The NNPC corporate office in Abuja served as the location for the agreements signing.
The Transfer Settlement, and Exit Agreement (TSEA) for Oil Mining Leases (OML) 123/124 and OMLs 126/137 was signed by NNPC Limited and Addax Petroleum Development (Nigeria) Ltd earlier today, according to a statement posted on Tuesday by the state oil company’s official Twitter account.
NNPC and Ashland initially agreed to a PSC for the blocks in 1973, but the agreement was canceled after 25 years.
The four OMLs were acquired by Addax when the NNPC ended its 1998 contract with Ashland.
The NNPC once again inked a PSC with Addax on the blocks in 1998, and for another 24 years, they ran through Addax Petroleum.
The four oil mining licenses were canceled by Nigeria’s oil regulator in April 2021 due to the company’s failure to meet goals but President Muhammadu Buhari overturned the decision three weeks later.
Mele Kyari, the group chief executive officer of NNPC Limited, claimed that the Addax transfer would increase the assets’ capacity to produce crude oil, which would be advantageous to Nigeria.
To get to where we are now, Mr. Kyari added, “We have worked with all our regulatory agencies, the FIRS, the FCCPC, NUPRC, and all other departments of government.”
“We feel that, in accordance with expectations, we have carried out the government’s directive to assume control of this asset. With respect to the approvals we have, there have been ongoing interactions with the FIRS.
“We anticipate that the asset will begin to generate income as of right now, and we will restart production while simultaneously making sure that all governance standards are met. In keeping with our commitment, there won’t be any interruptions in the company’s operations as we move forward.
“Last but not least, I am confident that the NNPC and Addax teams worked hard to create the current state of affairs. Since Nigeria is a good area to invest, we hope our partners continue with us there when they leave today ” he added.
This is the first time a PSC asset has been transferred from a contractor to the concessionaire in the history of the hydrocarbon production process, according to Bala Wunti, head of NNPC’s subsidiary National Petroleum Investment Management Services.
As soon as the exit agreement is signed, he explained, “We are entering a physical transition in which the asset operatorship will be passed to us in a very careful manner.”
“A framework for the transition has already been decided. The transitional framework will start right away.
“We anticipate being able to bring back and instantly restore roughly 10,000 barrels as soon as we sign this in two weeks, which will be a stage that will set additional incremental production. Without this signing, this would not have been feasible, according to Mr. Wunti.
Margary Okadigbo, Chairman of the NNPC Board, Mallam Mele Kyari, Group CEO, Executive Vice President, Upstream, Adokiye Tombomieye, Chief Upstream Investment Officer, Upstream Investment Management Services, Bala Wunti, Chief Financial Officer, NNPC, Umar Ajiya, Executive Commissioner, Development and Production, Nigerian Upstream Petroleum Regulatory Commission, Dr. Habib attended the event.
