Addax Petroleum’s four Oil Mining Licences (OMLs) have been revoked by the Department of Petroleum Resources (DPR) due to the company’s failure to grow its reserves.
OML 123, 124, 126, and 137 are among the properties that have been impacted.
Mr. Sarki Auwalu, the Director/Chief Executive Officer of DPR, told journalists in Lagos yesterday that more than half of the assets had remained undeveloped.
He said that the federal government lost money because the assets were not created.
“Addax refused to develop the assets and Addax was, therefore, not operating the assets,” he said.
He said going by the country’s 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 added: “You (Addax) know the potential of the asset, but you refused to develop it. This state of underdevelopment is against the principle of the Petroleum Act and constitutes revenue loss to the government.”
Auwalu said the situation was due to a lack of investment by Addax, which he said was also against the spirit of the Petroleum Sharing Contract (PSC).
“One of the assets – OML 137 – holds a gas reserve of more than three trillion cubic meters (TCM). This has the potential for us to increase our gas reserve and it can support the integration of gas development of the asset. The entire OML 137 holds about five TCM in two key reserves, but the company failed to develop this asset in line with the government’s gas revolution policy and it was, therefore, necessary to take a step to attract willing and capable investors to under the development of the assets both for our domestic use and exports,” he stated.
According to him, Since Addax took over, its oil reserves have remained flat, Auwalu said, adding that the company never made effort to grow the reserves.
He said crude oil in all three producing assets had been declining over the years due to inadequate investment by the company.
“There has also been significant gas flaring in all the assets, with no viable gas monetisation solution in place – either for domestic or export – which is contrary to our desire to make our economy’s gas-based by 2030. Above all, Addax has never supplied gas to the domestic market, even though they were given domestic gas supply obligation,” he said.
The revoked licenses were granted to Kaztec and Salvic Consortium after due process and on the same terms and conditions as Addax, according to Auwalu.
The consortium will consult with the DPR to finalize the asset transfer.