Group Faults Buhari’s Action on Four OMLs

A Civil Society Organisation, Good Governance Advocates, said it is “saddened that President Muhammadu Buhari has ordered the Department of Petroleum Resources (DPR) to restore the four oil mining licences revoked from Addax Petroleum while directing the DPR to retract the letter of revocation of the leases.”
It, however, commended the DPR for taking concrete steps to boost the revenue accruing to the government in the assets.

In a statement signed by its National President, Kema Maxwell, Good Governance Advocates acknowledged that Nigeria and China continue to enjoy cordial economic, political and social ties, and support the mutual development of both countries.

Tracing the genesis of the current impasse, Good Governance Advocates recalled that in 1998, NNPC entered into a 20-year PSC (Production Sharing Contract) in respect of certain oil mining leases (OMLs) with Addax Petroleum, a company listed on the Toronto Stock Exchange (TSX).

“The PSC was subsequently extended for a further four years, until 2022. The assets were OMLs 123, 124, 126 and 137. Under the PSC, Addax fully funded and operated the development of the OMLs, with profit shared between Addax and NNPC.

“From 1998 until 2009, Addax increased production in these OMLs to about 130,000 bpd. In 2009, Sinopec (a Chinese state-owned company) purchased Addax Petroleum. As a result, Sinopec obtained the rights to these assets,” the group added.

They alleged that no payments were made to the federal government during the purchase by either party.
“However, in recent years, there have been no new investments in the assets, and by 2021, production had declined to 25,000 bpd leading to significant reduction of revenue accruing to government.

“In addition, large gas resources in the assets have remained undeveloped, and excess gas has been continuously flared to the atmosphere, contrary to the policy of the federal government and best-practice international environmental practice,” it further alleged.

Maxwell further stated that since 2017, Sinopec has attempted, by a private sales process, to divest its rights in the PSCs (which are due to expire in July 2022) to a third party of Sinopec’s choice.