UPDATED: NNPC takes over Addax Petroleum’s PSC assets

++++Let’s update the eThe move, according to NNPC Limited, followed the termination of the Production Sharing Contract (PSC) relationship between both organisations.

The NNPCL Group Chief Executive Officer, Mele Kyari, signed the closing documents on behalf of the company, while the outgoing 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.

“After fulfilling closing obligations, NNPC Limited and Addax Petroleum Development (Nigeria) Limited today amicably terminated their 24-Year Production Sharing Contract (PSC) relationship,” the oil firm said on its official Twitter page on Tuesday.

Last November, NNPC Limited 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, Addax ceased to be the Production Sharing Contract (PSC) contractor for the Oil Mining Leases (OML) 123/124 and OMLs 126/137.

Background

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.

In a statement on Tuesday, NNPCL said it has taken necessary steps to take over the assets and oversee a clean, amicable, and speedy exit for Addax Petroleum Ltd, operate the asset on an interim basis as a first step and subsequently appoint a competent replacement PSC contractor while NNPC Limited continues to remain the concessionaire of the assets in line with extant laws and regulations.

“Exit negotiations and formalities have been concluded and NNPC Ltd. in collaboration with the Office of the Attorney General of the Federation, NUPRC, NMDPRA, FIRS, EFCC, and the FCCPC have agreed on the clean and amicable exit for Addax by resolving all the PSC contractual issues, including litigations that culminated in the execution of a transfer, settlement, and exit agreement (TSEA) on the 1st of November 2022.

“With the fulfilment of the closing obligations by the parties and effective from 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 of Mr President.

“As the Addax Assets return to NNPC Limited, it is expected that the much-needed investments will be deployed to the Assets while prudently conducting petroleum activities and creating value for the PSC, government, and other stakeholders,” it said.

READ ALSO: Buhari and the Revocation of Addax’s OML Leases, By Opeyem

NNPCL said it has announced the appointment of the transition team lead, Sagiru Jajere, as the managing director of Antan Producing Limited.

Mr Jajere was before his appointment the Head of PSC Investment Management at the NNPCL Upstream Investment Management Services (NUIMS).

He will be supported by a team of highly competent personnel with in-depth knowledge of the peculiarities of the Addax Assets, the oil firm said.