As reported by Premium Times, the Nigerian National Petroleum Corporation Limited (NNPCL) officially announced on Tuesday that it has signed a settlement and exit agreement with Addax Petroleum Development (Nigeria) Limited, a subsidiary of Sinopec Group. Under the binding deal, Addax Petroleum will fully withdraw from four core oil mining blocks in Nigeria.
Per NNPCL’s statement, Addax Petroleum is no longer classified as the Production Sharing Contract (PSC) contractor for Oil Mining Leases (OML) 123/124 and OML 126/137.
The official signing ceremony took place at NNPCL’s headquarters in Abuja. Umar Ajiya, Chief Financial Officer of NNPCL, signed the agreement on behalf of the Nigerian state-owned energy firm, while Yonghong Chen, Managing Director of Addax Petroleum, signed for the Sinopec subsidiary.
NNPCL further confirmed the milestone via its official Twitter account, stating that the two parties inked a Memorandum of Understanding covering the Transfer, Settlement and Exit Agreement (TSEA) for the four OML blocks in an early Tuesday ceremony.
The production sharing contract for the targeted oil blocks was initially signed between NNPC and Ashland in 1973, with a scheduled 25-year service term. After NNPC terminated its cooperation with Ashland in 1998, Addax Petroleum took over the ownership and operational rights of the four oil mining leases.
NNPCL signed a new PSC with Addax Petroleum in 1998, enabling the Sinopec subsidiary to operate the four oil blocks continuously for 24 years.
The project experienced a major regulatory twist in April 2021, when Nigeria’s petroleum regulator revoked Addax’s operating licenses for the four blocks over unmet operational targets. However, the license revocation decision was overturned by Nigerian President Muhammadu Buhari just three weeks later.
Mele Kyari, Group Chief Executive Officer of NNPCL, emphasized that the official handover of Addax’s oil assets will effectively boost Nigeria’s crude oil output and bring substantial economic benefits to the country.
“We reached this landmark agreement through in-depth collaboration with all regulatory bodies, including FIRS, FCCPC, NUPRC and other relevant Nigerian government agencies,” Kyari stated.
“We have fully fulfilled the government’s mandate to take over these assets in compliance with official approvals and coordination with FIRS. Starting immediately, we expect rapid operational recovery of these assets and full resumption of crude production.”
Kyari also confirmed that the handover will strictly comply with all governance and regulatory requirements, maintain stable workforce confidence, and ensure zero disruption to daily operational activities. He praised the dedicated efforts of both NNPCL and Addax teams in finalizing the deal, and expressed sincere hope for Addax’s continued investment interest in Nigeria’s promising energy market.
Bala Wunti, Head of National Petroleum Investment Management Services (a subsidiary of NNPCL), highlighted the historic nature of the transaction. He noted that this marks the first-ever handover of PSC assets from a private contractor back to the franchise holder in Nigeria’s oil and gas production history.
“Following the signing of the exit agreement, we will launch a formal and prudent asset transition process to take over full operational rights of the blocks,” Wunti explained.
“We project an immediate production recovery of approximately 10,000 barrels of crude oil per day within two weeks after the agreement takes effect. This production growth is impossible to achieve without this settlement and exit deal, which will strongly boost Nigeria’s overall crude output.”
