Senate probes allege N1.2trn oil revenue loss to SINOPEC ADDAX Petroleum

The Senate on Tuesday constituted a seven-member ad hoc committee to investigate an alleged N1.2 trillion oil revenue loss to the Federal Government owing to an alleged breach by SINOPEC ADDAX Petroleum.

The ad hoc Committee which is chaired by Senator Aliyu Sabi Abdullahi has six other members which include, Gershom Bassey; Biodun Olujimi; Ahmad Kaita; Jubril Isah; Michael Nnachi; Clifford Ordia; and Haliru Jika.

The decision to investigate the revenue loss which should have accrued to the Federal Government was contained in a resolution by the Senate after it considered a motion sponsored by Bassey.

The Senator noted that in 2000/2001, the Federal Government had provided a Fiscal Incentive Package to Addax Petroleum Company.

He said the development saw the reduction of the company’s Petroleum Profit Tax from 85 per cent in 1998 while its Production Sharing Contract was reduced to 60 per cent in the 2001 Fiscal Incentive Package.

He said the companies share of oil lifting increase from about 45 per cent to 56 per cent.

The lawmaker said Addax Petroleum followed through by investing to grow production from about 10,000bpd in 2000 to over 100,000bpd by 2008.

He noted that after the purchase of Addax Petroleum by SINOPEC in 2009, “the assets had witnessed significant production decline due to poor investment decisions making production levels to fall presently to approximately 30,000bopb with no developed gas.”

Bassey said, “SINOPEC Addax despite holding a 100 percent Production Sharing Contract with oil mining leases OML-123, OML-124, OML-126 has refused to stick to its end of the bargain to continue investing in the operated assets leading to a revenue loss of about $3.55 billion per year by the Nigerian Government.”

The lawmaker said, “In the fourth quarter of 2018, the lack of competent operations by SINOPEC-ADDAX made five Nigerians General Managers and their deputies to exit the company voluntarily.

“Given the lack of any demonstration by Sinopec-Addax to stay in Nigeria because of the company’s unwillingness to purchase an office building and its refusal to invest for production growth.

“It is shocking that NNPC continues to honour the elapsed gentleman’s agreement that made Sinopec Addax operate these assets and lift 70 per cent of the crude oil they are producing resulting in a huge annual revenue loss to the Nigerian Government;

“In 2016 the process of Value For Money audit of $1.37bn worth of oil that had been lifted by Addax Petroleum from 2097 to 2014 was initiated with the understanding that it would take three months to conclude;

“Since the initiation of the VFM audit in 2016, Sinopec Addax Petroleum has continued to enjoy oil over lift and have frustrated the process of conclusion of the audit to allow for the equitable and accurate determination of lifting;

“The Covid-19 pandemic has negatively impacted on our economy and has thrown Nigeria into debt meanwhile the Federal Government has over N1.2trn of its oil revenue lying with Sinopec-Addax Petroleum Company; and

“Sinopec Addax Petroleum will be leaving an abandonment/decommissioning liability cost of about $750m at the expiration of their stay in Nigeria come 2022.”