TheCable

Kaztec Engineering Limited and Salvic Petroleum Resources consortium have entered talks with Addax Petroleum, owned by China’s Sinopec Group, to ensure a smooth and amicable transition as new operators of oil mining licence (OML) 123, 124 and 125 and 137.

In a statement on Thursday, the consortium said this is line with the Department of Petroleum Resources (DPR) direction.

It also commended the regulator for due diligence in selecting it to operate Addax oil blocks.

Earlier this month, DPR revoked the OMLs from Addax over non-development of the assets for several years.

Three weeks later, it set up a committee to evaluate the revoked oil blocks in preparation for the formal hand over to the consortium.

Barely two days after the announcement of a committee, Muhammadu Buhari restored ownership of the revoked OMLs to the Nigerian National Petroleum Corporation (NNPC), who operates the licences in production sharing contract (PSC) with Addax.

The consortium, however, explained that the essence of a new operator was to ensure a seamless transition of operations with no disruptions in production or loss of revenue to the federal government.

“The choice of consortium is also in accordance with the Nigerian Oil and Gas Industry Content Development (Local Content) Act which was enacted in 2010 to promote indigenous operation of Nigeria’s oil and gas assets,” the statement read.

“Under the Act, seasoned Nigerian independent operators like Kaztec and Salvic are to be given first consideration in the award of oil blocks and oil field licenses.”

According to the statement, the consortium is required to operate the OMLs under a PSC with NNPC, and pay a good and valuable consideration (GVC) of $340 million at the commencement of the PSC.

It is required to develop the significant oil resources which have been inactive, and ramp up production.

It is also expected to commence development of the large gas resources on the assets within 24 months, both for the domestic market and for export, in line with the federal government’s aspirations for the gas industry.

The statement added that the federal government charged the consortium to ramp up investment in the OMLs so that production revenues, royalties and taxes to the government will exponentially increase, in addition to the upfront payment of GVC.