TheCable

The Department of Petroleum Resources (DPR) has revoked four production sharing contracts (PSCs) operated by Addax Petroleum over non-development of the assets for several years.

Sarki Auwalu, director of DPR, said this during an interactive session with journalists on Tuesday.

The PSCs consists of oil mining licence (OML) 123, 124, 126 and 137, all belonging to Addax Petroleum Development Nigeria Ltd (APDNL) and Addax Petroleum Exploration Nigeria Ltd (APENL).

Auwalu said going by the Nigeria 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 explained that over 50 percent of the assets under Addax control remain undeveloped after several years, adding that they (assets) were not being operated “in a vigorous manner and that constitutes revenue loss to the government.

“Addax refused to develop the assets and Addax were therefore not operating the assets.”

Citing OML 137, the DPR director said it holds gas reserves of more than three trillion cubic feet (tcf) and the resources have remained flat over the years without any form of development.

He said based on investigations, crude oil production around the oil blocs has been declining due to inadequate investment, pointing out that significant gas flaring persisted, “contrary to our desire to move the economy to gas”, adding that Addax never supplied gas to the domestic market.

Auwalu also said the revoked licences have been awarded to Kaztec and Salvic Consortium, following due process based on the same terms and conditions given to Addax.

He noted that APDNL is fully aware of the on-going development and all the affected parties have been interacting on the issue.

“It is the outcome of the regular interactions that have led to this action which makes it necessary for us to recommend to government to take this necessary action.

“The license has been awarded to a new consortium that will assume the new assets on the same terms.”

He said “very soon” DPR will invite Kaztec and Salvic Consortium, APDNL, APENL and NNPC to a meeting to begin preliminary handover formalities accordingly.