Gas flaring is seen at Mexico's state-run oil monopoly Pemex platform "Ku Maloob Zaap" in the Northeast Marine Region of Pemex Exploration and Production in the Bay of Campeche
Reuters

China's Sinopec's Addax Petroleum Development (Nigeria) on Tuesday exited four Nigerian oil blocks and handed them over to a state-owned oil concern, following the signing of a Memorandum of Understanding (MoU) on the Transfer, Settlement and Exit Agreement(TSEA) reported Reuters.

With this move, Addax now ceased to be the Production Sharing Contract (PSC) contractor for the Nigerian National Petroleum Company Ltd (NNPC).

"NNPC Ltd and Addax Petroleum Development (Nigeria) Ltd signed a Memorandum of Understanding on the Transfer, Settlement and Exit Agreement for Oil Mining Leases (OML) 123/124 and OMLs 126/137," read the statement issued by NNPC on its official Twitter account.

The signing of the agreement was confirmed by Bala Wunti, the Chief Investment Officer of NNPC Upstream Investment Management Services. "With this agreement, Addax has ceased to be the PSC contractor of the asset," said Wunti. However, the terms and clauses of the agreement were not disclosed by either party. Addax won the leases for the oil blocks back in April 2021, but they were revoked by the NNPC, Nigeria's petroleum regulating body.

The regulator accused Addax of non-performance in developing the oil fields to their best capacity; however, the decision was overturned by Nigerian President Muhammadu Buhari around three weeks later.

After months of deliberations and discussion, NNPC recommenced its operations with Addax on 25th January 2022. The months that followed saw a flurry of meetings over the company's exit plans and formalities, and accompanying measures.

Addax's engagement with the country goes back more than two decades. The company began operations in Nigeria in 1998 after signing the Production Sharing Contracts (PSCs) with NNPC. NNPC acquired its status as a commercial entity in July and is currently engaged in bulking up its assets ahead of a planned IPO (initial public offering) in the second half of 2023.

This move is set to strengthen diplomatic ties between China and Nigeria and clear the road for bilateral economic relationships to develop further.