Why Addax Petroleum lost Nigerian assets – NUPREC

Limited/Salvic Petroleum Consortium.

But, President Muhammadu Buhari overruled the ministry of petroleum and the DPR, thereafter ordering the restoration of the leases to Addax Petroleum, which was in production sharing contract with the NNPC.

The decision to return the assets to the Chinese firm, according to a statement signed by the Senior Special Assistant on Media and Publicity, Garba Shehu then, was in line with the administration’s commitment to the rule of law, fairness and enabling a stable business climate for investment.

While directing the DPR to retract the letter of revocation of the leases, the president had also asked the NNPC to utilise contractual provisions to resolve issues in line with the extant provisions of the Production Sharing Contract arrangement between the corporation and Addax

The decision by Buhari was based on the strength of a letter written to him by the NNPC on April 20, 2021, arguing that the revocation of the oilfields would have implications on the Nigerian economy and the diplomatic relationship between Nigeria and China.

The NNPC had warned the president that the revocation, if unresolved, would create an unprecedented level of contingent liability of well over $1 billion for NNPC as the party in contract with Addax as well as reputational damage to the countr y.

The NNPC had then written: “Addax has not been investing in capital projects, development drilling, and exploration activities due to dispute on applicable fiscal terms on its blocks.”

The corporation had reminded the president that China was providing financing for key infrastructural projects like the railways projects and the AbujaKaduna-Kano Gas Pipeline Projects, amongst others, and warned that the revocation action could also threaten the realisation of these critical projects.