Addax Petroleum Corporation, together with its partners Chrome Oil Services Limited (Chrome) and Korea Gas Corporation (KOGAS), has received the approval from the Federal Government of Nigeria, for its proposed implementation of an integrated gas utilization project in Nigeria. Addax Petroleum has also entered into a heads of agreement with Chrome, a leading Nigerian oil and gas company, and KOGAS, South Korea's national gas company, forming an international consortium which, upon finalization of the necessary project development agreements, will take responsibility for the development of this integrated gas utilization project in response to the Nigerian Government's current gas marketing master plan.

Commenting, the Honourable Minister of State for Energy, Gas, Emmanuel Olatunde Odusina, said: "We are very pleased that Addax Petroleum, Chrome and KOGAS have initiated this project in conjunction with our country's Policy Direction for Gas and Gas Master Plan. This is a significant step forward in the development of Nigeria's substantial gas resources and its continuing economic development.

The combination of domestic and international interests in the Consortium together with the involvement of the Bayelsa State Government also signifies the confidence of the respective communities in our plan and the bright future of Nigeria." Commenting, Jean Claude Gandur, President and Chief Executive Officer of Addax Petroleum said: "We are extremely proud to be an early participant in Nigeria's Gas Master Plan and to have received the approval of the Federal Government.

This is an important milestone for Addax Petroleum in the development of the considerable gas resources in our licence areas in Nigeria. We believe that the strong relationship between Addax Petroleum, Chrome and KOGAS brings together the vital and complementary international and domestic expertise required for our consortium to play a significant role in realising Nigeria's gas plans.

Additionally, we believe this proposed project will provide significant benefits to Nigeria and its people by way of power generation, employment creation and substantial foreign direct investment." In early 2008, the Federal Government of Nigeria launched a Gas Master Plan through which it is seeking to unlock the country's massive gas potential for the accelerated economic development of Nigeria. The principle underlying the government's Policy Direction for Gas is to competitively position Nigerian gas in terms of cost competitiveness and scalability of capacity. The Policy is focused on an integrated infrastructure strategy to support domestic, regional and export LNG markets while attracting new players into the Nigerian gas value chain and ensuring commerciality for all investments. Today, Nigeria reportedly contains proved gas reserves of approximately 182 Tcf, ranking it seventh in the world. Through the Gas Master Plan, the Nigerian government is encouraging the beginning of dedicated gas exploration, and has stated that Nigeria has the potential to increase gas reserves to as much as 600 Tcf which would establish it as the fourth largest in the world.

The integrated gas utilization project proposed by the Consortium and approved by the Federal Government is intended to include the exploration and development of gas fields in Nigeria, including the Corporation's OML137, to secure the gas reserves necessary to commercialise a new LNG production facility of up to 10 million tonnes per annum to be sited on Brass Island in Bayelsa State, to provide domestic power generation capacity of up to 1,000 megawatts and to provide feedstock for the development of petrochemical facilities.

As part of the Federal Government approval, the Consortium has been instructed to cooperate with the Nigerian Ministry of State for Energy (Gas), the Department of Petroleum Resources and the Nigerian National Petroleum Corporation to establish fiscal and commercial terms for the upstream and downstream activities that meet the required investment levels for all participants in the project. The Corporation believes that these negotiations will take place rapidly and can be concluded in a timely fashion to achieve final investment decision by the end of 2009.

As at December 31, 2007, Netherland, Sewell & Associates Inc. (NSAI) estimates the Corporation's best estimate contingent gas resources in Nigeria to be 2,414.8 Bcf and associated liquids to be 77.2 MMbbl. Contingent gas resources reported are limited to the Corporation's producing license areas in the shallow water and onshore license areas of Nigeria only. These gas resources are discovered but are categorized as contingent because the commerciality of the gas resources and the terms by which the Corporation can produce the gas resources are yet to be established.

Tags: Addax Petroleum Corporation, Chrome Oil Services Limited, Korea Gas Corporation