China’s Addax exits four Nigerian oil blocks as NNPCL inks asset transfer agreement

Sinopec’s Addax Petroleum Development (Nigeria) Ltd has exited four Nigeria oil blocks OMLs 123/124, 126/137 as the Nigerian National Petroleum Company (NNPC) Ltd on Tuesday (1 October) signed a Memorandum of Understanding (MoU) on the Transfer, Settlement and Exit Agreement (TSEA).

Addax began operations in Nigeria in 1998 by signing Production Sharing Contracts (PSCs) with NNPC. Bala Wunti, the CIO of NNPC Upstream Investment Management Services said “with this agreement, Addax has ceased to be the PSC contractor of the asset.“ NNPC and Wunti did not give the terms of the agreement. By the agreement, the protracted dispute on the blocks operated by Addax has finally been resolved thus charting a course for much-needed investment and growth on the oil blocks. With this agreement, Addax has ceased to be the Production Sharing Contract (PSC) contractor for the asset.

The PSC for the blocks was initially signed in 1973 between NNPC and Ashland and terminated after 25 years. Again, the NNPC in 1998 signed another PSC with Addax in 1998 on the blocks and operated through Addax Petroleum for another 24yrs. The oil leases were in April 2021 revoked by the petroleum regulator which accused Addax of failing to develop them sufficiently, but the decision was overturned by President Muhammadu Buhari three weeks later. However, in January 2022, NNPC Ltd. commenced formal engagements with Addax and NUPRC, followed by a series of meetings to ensure a swift closeout of the exit discussions and formalities. The exit agreement is expected to boost both commercial and diplomatic relations for Nigeria and China.