*How DPR Boss Enfeebled Kyari’s Political Influence
The Addax Petroleum dispute is the perfect illustration of how the NNPC has been able to drive home its dominence over the country’s petroleum regulator.
The surprise move by the Department of Petroleum Resources (DPR) to revoke OMLs 123, 124, 126 and 137 from Addax Petroleum in March did not at all go as planned.
Just a month later, President Muhammadu Buhari’s spokesman Garba Shehu issued a statement to say that the head of state had overruled the DPR’s decision to award the blocks to Kaztec Engineering and Salvic Petroleum on the basis that only the Nigeria National Petroleum Corp (NNPC) has the authority to do so. Buhari then announced on 27 April that the licences had been restored to Addax, a subsidiary of Chinese state-owned group Sinopec.
A clash of two oil networks
Sarki Auwalu,who stepped in as director general of the DPR in December, believed that he had enough backing to push ahead with the revocation although it was the NNPC’s role to seize Addax’s shares should the company fail in its obligations. Auwalu still gave it a shot, feeling able to draw on his close ties with Minister of State for Petroleum Resources Timipre Sylva. Previously governor of the oil-rich state of Bayelsa, Sylva has been a stalwart of the ruling All Progressives Congress party in the Niger Delta region since its formation in 2013.
But the Auwalu-Sylva duo, close to Kaztec and Salvic, respectively run by billionaires Emeka Offor and Ambrosie Bryant Chukwueloka “ABC” Orjiako, came up against another much more powerful network crowned by NNPC group managing director, Mele Kyari, and Buhari himself. The president has been at the helm of the ministry of petroleum since 2015. Kyari has made it obvious to all that he is the true captain of Nigeria’s oil sector and cannot be pushed aside. Auwalu was forced to concede by letting the president’s office communicate about the affair.
Pressure from China
After four of the licences were restored to Addax, representing a total 25,000 bpd, the group’s Nigerian manager, Yonghong Chen, sent a confidential letter to DPR on 6 April in which he expressly threatens to take the matter to court and involve the Chinese embassy in Abuja and the Chinese government. Under mounting diplomatic pressure, Buhari decided to look into the revocation process in which there were numerous irregularities. The DPR should have first let the concessionary NNPC take back the shares in the event one of its partners failed to fulfil its obligations.
The DPR had asserted that Addax was not developing several fields declared to be commercial. There is also a colossal unresolved tax dispute over the blocks. In 2018, Nigeria sued the Chinese firm before a court in Abuja over what it estimated to be $1.3bn in unpaid royalties and $1.7bn in unpaid tax on oil profit (Africa Intelligence,20/03/18). Through there was a process to seize some of Addax’s assets over the dispute, this was never finalised.
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