More uncertainty as Nigeria revokes four Addax Petroleum licences

The Nigerian government through the Department of Petroleum Resources (DPR) has revoked the four oil licences belonging to Chinese-owned oil firm, Addax Petroleum Development Nigeria Limited, a development that continues to breed uncertainties in Nigeria’s oil and gas sector.

Africa Oil & Gas Report, an energy intelligence publication by an analyst, Toyin Akinosho, reported that the decision was conveyed in a letter signed by DPR, which revoked Oil Mining Leases (OMLs) 123, 124, 126 and 137, all operated by Addax Petroleum Development Nigeria Limited (APDNL) and Addax Petroleum Exploration Nigeria Limited (APENL).

The intelligence publication noted that the government immediately awarded those assets to Kaztec Engineering Limited/Salvic Petroleum Resources Limited (KEL/Salvic) Consortium, consisting of two Nigerian owned independents, with effect from March 23, 2021, with the approval of President Muhammadu Buhari.

“The re-award happened so swiftly after the revocation letter, in a matter of three days, leading to the Easter Holiday weekend, that the process signals itself as unusual,” Africa Oil & Gas Report noted.

Calls and text messages sent by BusinessDay to DPR’s spokesman, Paul Osu, receive no response as at the time of publication.

While most experts admit that it is within the powers of DPR to revoke licences, especially oil blocs not producing, however, others claim the move might send the wrong signal to potential investors willing to invest in Nigeria’s oil and gas sector, which has been engrossed in legal battles especially with landmark cases involving the government.

“The reason the government gave for the withdrawal of the licences was weak,” a senior oil executive who pleaded anonymity, said, noting that Nigeria ought to handle the case carefully to avoid another court case that could cost the government if found guilty.

“Even if you want to revoke the licences, make sure the reasons are legitimate or wait till it is time for renewal,” he said.

In the past few years, Nigeria’s oil and gas sector has been in local and international news for many reasons. For instance, Nigeria is trying to overturn a judgment delivered by a UK court, which awarded a judgment debt of $9.6 billion against the Federal Government.

Also, the United States Southern District Court of New York discharged the Nigerian National Petroleum Corporation (NNPC) of paying another $2.7 billion in a case involving ESSO Exploration and Production Nigeria Limited and Shell Nigerian Exploration and Production Company Limited.

“I am curious about lessons learnt over revocation and re-award of licences given the mess that became Oil Prospecting Licence (OPL) 245,” Seun Smith, an industry research analyst, tweeted on Friday.

For most experts, the many legal actions that followed the award of Oil Prospecting Licence (OPL) 245 to Malabu Oil & Gas Limited have kept Nigeria in the eyes of the storm, exposing the level of corruption, lack of accountability and transparency condoled in a sector that provides the chunk of the country’s revenue.

Nigeria currently has a total of 390 oil blocs that have been discovered, and only 179 of them have been awarded to individuals and corporations, while 211 are yet to be awarded, data from Nigeria’s DPR show.