An oil industry group, Oil Industry Indigenous Capacity Action Committee, has faulted President Muhammadu Buhari’s order for the restoration of an earlier cancelled Oil Mining Licences (OMLs) 123, 124, 126 and 137 to Addax/Sinopec.
It hailed the earlier decision by the Department of Petroleum Resources (DPR) to re-allocate four OMLs from Addax/Sinopec as a good decision for the development of local content and oil production in Nigeria.
Reacting to the decision of the DPR, the group said the government was right to have revoked the licences of Sinopec, which acquired the fields from the original owner, Addax Petroleum in 2009. Experts believe that the fields which have been operating at less than 20 per cent of their peak production since 2009, still hold tremendous potential in oil and gas and will benefit from the new consortium’s cognate experience in the industry.
The group notes that the “new consortium has committed to pay US$340million at the commencement of the PSC to the Federal Government, a much needed sum in these hard times of lean government finance.”
In the press statement signed by Mr John Adakpabiri, the group stated: “It will be recalled that in March the DPR announced the revocation and reallocation, which it said was with the express approval of President Muhammadu Buhari. The fields were acquired by Addax Petroleum in 1998 under a PSC (Production Sharing Contract) between it and the NNPC for 20 years. The PSC was extended for a further four years, until 2022. Up until Addax was acquired by Sinopec in 2009, it fully funded and operated the development of the OMLs, with profit shared between Addax and NNPC and raised the output in these OMLs to about 130,000 bpd (barrels per day).”
Adakpabiri continued that: “In recent years, there have been no new investments in the assets, and early this year, production had declined to 25,000 bpd. As a result, the revenue accruing to government has significantly reduced. In addition, large gas resources in the assets remain undeveloped, and excess gas has been continuously flared to the atmosphere, contrary to the government’s policy on gas flaring.
“The allocation of the fields is a refreshing vote of confidence in local firms in the Oil and Gas industry, where a lot of local players have proved their mettle and justified the confidence placed on them.
“The Department of Petroleum Resources deserve kudos for not only taking the timely decision to reallocate the assets but in making the choice of key local players in line with the Nigerian Oil and Gas Industry Content Development (Local Content) Act designed to promote local Content in the industry…”