Nigeria’s oil and gas industry leaps forward as protracted dispute on Addax OMLs 123/124, 126/137 blocks resolved

Following an amicable resolution of the  protracted dispute on OMLs 123/124, 126/137, operated by Addax Petroleum Nigeria Limited,  the management of the Nigerian  National Petroleum Company Ltd (NNPCL) has set up a Transition Management Team (TMT) to manage oil production and develop the gas potentials of the acreages.

The Group Chief Executive Officer of NNPC Ltd, Malam Mele Kyari said on Tuesday in Abuja in his address at the close-out and signing ceremony of Addax Asset Transfer, Settlement And Exit Agreement that the TMT should hit the ground running towards the restoration and fulfillment of the promise of the assets.

Persecondnews reports that the resolution of the dispute has paved the way for a much-needed investment and growth on the oil blocks.

This is another laudable achievement by NNPC Ltd that is set to deliver additional value to the nation through increased oil production and gas monetization from the resource-rich acreages.

Kyari said: “Looking into the future, NNPC Ltd has assembled a Transition Management Team to manage oil production and develop the gas potentials of the acreages.

“Re-adjustment is expected to be swift and efficient, and there will be no excuses for production losses/deferment as NNPC Ltd has proven that it is ready to provide all the necessary support required.

“Due to multiplicity of challenges witnessed by the Assets over the years, most especially in recent past, they (combined) are currently producing an average of 6,000 BOPD, but with good asset management in place, a production increase of circa 10,000 BOPD is expected before the end of the year, and total production is expected to be doubled in 2023.’’

The Production Sharing Contract (PSC) for the blocks was initially signed in 1973 between NNPC and Ashland and terminated after 25 years.

Subsequently, NNPC signed another PSC with Addax in 1998 on the blocks and operated through Addax Petroleum for another 24yrs.  The Addax PSCs were associated with significant intricacies and complexities and attendant disputes.

The disputes associated with these Addax were deeply sown to the extent that they threatened the cordial diplomatic relations between the Federal Republic of Nigeria and the People’s Republic of China.

Consequently, the assets have suffered a significant lack of investment as multiple historical litigations have hindered the attainment of the desired objectives of value creation to the PSC parties, Government, and other stakeholders.

In 2021, issues around the revocation of the licences were reconsidered and the upstream industry regulator (NUPRC) advised that the asset be returned to the Concessionaires (NNPC Limited) to ensure clean and amicable exit for Addax.

On January 25, 2022, NNPC Limited commenced formal engagements with Addax and NUPRC, followed by series of meetings to ensure a swift close-out of the exit discussions and formalities, culminating in the preparation and signing of a Transfer, Settlement and Exit Agreement (TSEA).

The Agreement received the support of the Presidency, Office of the Attorney General of the Federation, NUPRC, FIRS, EFCC, and the FCCPC, which led to a clean and amicable exit for Addax by resolving the PSC contractual issues in a robust, organized, and tactful manner, an occasion where all stakeholders and government agencies showed camaraderie to achieve a common objective.