More facts have emmerged on why Muhammadu Buhari over ruled the decision to revoke the Oil Mining Leases (OMLs) allocated Addax Petroleum Development Company .
The failure of Department of Petroleum Resources DPR to follow some of the basic rules guiding revocation of Oil Mining Leases was a major reason for the presidents action.
Addax is a contractor to Nigerian National Petroleum Corporation (NNPC) who is the owner of the blocks that are being operated under the Production Sharing Contract (PSC) arrangment.
The operation of the OMLs is just like a sole risk. If Addax Petroleum Development Company is able to find oil it would be to the benefit of Nigeria and if it does not find oil, the company would be the losser, as it would have invested its money without result.
An industry source told Businessstandardsng.com that the inability of Addax Petroleum to operate the block may not be entirely the fault of the company , as it must get approval from the NNPC before doing anything on the blocks.
He said it could be that the NNPC refused the work plan of the company base on costs stated for the execution of the projects.
The source went further to state that instead of DPR approaching the NNPC, to find out what the problem has been, or why works are not going on the blocks, it did not, but just went straight to revoke the licenses of the blocks.
“NNPC must approve the work plans of Addax Petroleum before it can move ahead”, the source said.
It is also believed that Addax is a Chinese company, there are fears that the Chinese government that have been so much involved in funding many projects in the country, may on account of the action of DPR stop funding some of the projects it is currently going on in the country. Doing this, would be too dangerous for the country and cause serious setback for the Presidenet Muhammadu Buhari’s desire to leave a lasting legacy for infrastructure development in the country.
The Chinese are funding the Ajaokuta, Kaduna and Kano gas pipeline. They are also the one funding various rail projects scattered across the country. There are other projects that Chinese are funding in the country aside from these.
The Nigerian President Muhammadu Buhari reversed a government decision to revoke four oil permits from a unit of China’s Sinopec.
Buhari “approved the restoration” of the licenses to Addax Petroleum Corp. as part of his commitment to “the rule of law and sanctity of contracts,” spokesman Garba Shehu said.
The Department of Petroleum Resources, announced the termination of the leases on April 6.
The president directed the DPR “to retract the letter of revocation,” according to Shehu. He instructed the Nigerian National Petroleum Corp, which is in a partnership with Addax, to “resolve issues” in line with their contractual relationship, he said.
The DPR said it withdrew the permits known as Oil Mining Leases 123, 124, 126 and 137 because of Addax’s failure to develop the assets sufficiently. It had planned to transfer the licenses to two local companies, Kaztec Engineering Ltd and Salvic Petroleum Resources Ltd.
Addax pumped an average of about 30,000 barrels per day in 2019, equivalent to about 1.5% of the country’s output, according to data published by the NNPC. Other than the OMLs, the China-owned producer also holds a small stake in a marginal field in Nigeria.