Buhari Over-rides DPR On Four Oil Blocks, Restores Ownership To NNPC

President Muhammadu Buhari has overruled the Department of Petroluem Resources on the revocation of four oil blocks and has given approval for the restoration of the leases on the four Oil Mining Licences to the Nigerian National Petroleum Corporation.

The oil licences affected are OMLs 123, 124, 126 and 137.

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The DPR had on March 30, 2021, revoked the licences belonging to the federation.

But in a statement issued on Friday by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, the President directed the DPR to retract the letter of revocation of the leases.

He also directed the NNPC to utilise contractual provisions to resolve issues in line with the extant provisions of the Production Sharing Contract arrangement between NNPC and Addax.

The restoration of the blocks to NNPC is expected to boost the organisation’s portfolio, thereby making the Corporation to, in the long run, boost its crude oil production and in turn increase the revenue it generates to the Federation Account.

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The statement reads, “In line with the current administration’s commitment to the rule of law, fairness and enabling a stable business climate for investment, President Muhammadu Buhari has approved the restoration of OMLs 123, 124, 126 And 137 leases to the Nigeria National Petroleum Corporation which is in Production sharing contract with Addax Petroleum (a company wholly owned by Government of the People’s Republic of China) on the blocks.

“The leases belonging to the Federation were revoked on March 30, 2021. This development reaffirms the commitment of President Buhari to rule of law and sanctity of contracts.

“While directing the DPR to retract the letter of revocation of leases, President Buhari also directed the NNPC to utilize contractual provisions to resolve issues in line with the extant provisions of the Production Sharing Contract arrangement between NNPC and Addax.”

The DPR had on April 7 revoked the four Oil Mining Licences belonging to Addax Petroleum due to the non-development of the assets by the petroleum company.

The Director/Chief Executive Officer, DPR, Mr. Sarki Auwalu, told journalists in Lagos that it was discovered that over 50 per cent of the assets had remained underdeveloped.
He said the non-development of the assets led to the loss of revenue by the federal government.

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“Addax refused to develop the assets and Addax was, therefore, not operating the assets,” he said.

He said going by the country’s Petroleum Act, “the first reason for a revocation is when you discover that the asset is not being developed, according to the business guidelines, because it is economic sabotage.”

He added: “You (Addax) know the potential of the asset, but you refused to develop it. This state of underdevelopment is against the principle of the Petroleum Act and constitutes revenue loss to the government.”

Auwalu said the situation was due to a lack of investment by Addax, which he said was also against the spirit of the Petroleum Sharing Contract.

“One of the assets – OML 137 – holds a gas reserve of more than three trillion cubic meters. This has the potential for us to increase our gas reserve and it can support the integration of gas development of the asset.

The entire OML 137 holds about five tcm in two key reserves, but the company failed to develop this asset in line with the government’s gas revolution policy and it was, therefore, necessary to take a step to attract willing and capable investors to under the development of the assets both for our domestic use and exports,” he stated.

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According to him, the average reserve profile of the assets showed that oil reserves have remained essentially flat.

Since Addax took over, its oil reserves have remained flat, Auwalu said, adding that the company never made efforts to grow the reserves.

He said crude oil in all three producing assets had been declining over the years due to inadequate investment by the company.

“There has also been significant gas flaring in all the assets, with no viable gas monetisation solution in place – either for domestic or export – which is contrary to our desire to make our economy’s gas-based by 2030.

“Above all, Addax has never supplied gas to the domestic market, even though they were given domestic gas supply obligation,” he said.

Auwalu stated that the revoked licences have been awarded to Kaztec and Salvic Consortium after due process, based on the same terms and conditions given to Addax.

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