The defunct Department of Petroleum Resources (DPR) had in March 2021, revoked the oil mining leases (OML) – (OMLs) 123, 124, 126 and 137 granted to the Chinese firm but the oil blocks were restored to it on the directive of President Muhammadu Buhari following the intervention of the Nigerian National Petroleum Corporation (NNPC).
However, Addax reportedly failed to meet its obligation in line with guidelines governing the process, prompting regulatory authorities to nullify the award.
Gbenga Komolafe, Chief Executive Officer (CEO) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), explained on Thursday that the revocation followed Addax Petroleum’s inability to meet its obligation in line with stipulated guidelines governing the process.
Komolafe said the oil assets consequently reverted to the NNPC’s ownership because the award to Addax Petroleum had lapsed.
He explained: “The status of the Addax Petroleum award is that right now the awardees have not been able to meet their obligations in line with the provisions of the award.
“And by the operations of the law, the award stand elapsed and it’s automatically reversed to the NNPC, that is the status as for now.”
The DPR had in March 2021 revoked the oil mining licences, citing non-development of the assets by the oil firm, which resulted in the oil firm’s inability to comply with the work programme targets.
Sarki Auwalu, the then Director of the DPR, claimed the licences were revoked after the regulatory agency discovered that over 50 per cent of the assets had remained underdeveloped, resulting in revenue losses.
Auwalu said then the OMLs had been awarded to Kaztec Engineering Limited/Salvic Petroleum Consortium. Oil industry sources alleged then the oil mining leases were rewarded to the indigenous oil firm after bribing the DPR authorities with colossal amounts.
But following the intervention of the NNPC, which had warned that the DPR’s action, aside resulting to reputational damage for the country, could create an unprecedented level of contingent liability of over $1 billion for it (NNPC) as the party in contract with Addax.
Besides, the NNPC in a letter dated April 20, 2021 to President Buhari, had noted that the revocation of the oilfields would have dire negative implications on the Nigerian economy as well as the diplomatic relationship between Nigeria and China.
Consequently, President Buhari, in a memo signed by Garba Shehu, one of his aides, ordered the DPR and the Ministry of Petroleum Resources to restore the licences to Addax which was in production sharing contract with the NNPC.
President Buhari explained that the restoration of the licences was in line with his administration’s commitment to the rule of law, fairness and enabling a stable business climate for investment.
However, the oil mining licences were again revoked by the federal government as the Chinese firm was still unable to meet regulatory guidelines.