Addax Petroleum announces Federal Government Approval of Nigeria Gas Utilisation Initiative



    International consortium formed for investment in gas development -
    including the potential monetization of OML137 gas

    CALGARY, Aug. 1 /CNW/ - Addax Petroleum Corporation (TSX: AXC and LSE:
AXC) ("Addax Petroleum" or the "Corporation"), together with its partners
Chrome Oil Services Limited ("Chrome") and Korea Gas Corporation ("KOGAS"),
announces today that it 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 (the "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 Nigeria Gas Master Plan investor roadshow and additional information is
available on the Nigeria Gas Master Plan 2008 website, www.ngmproadshow.org.
    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.

    About Addax Petroleum

    Addax Petroleum is an international oil and gas exploration and
production company with a strategic focus on West Africa and the Middle East.
Addax Petroleum is one of the largest independent oil producers in West Africa
and has increased its crude oil production from an average of 8,800 bbl/d for
1998 to an average of approximately 139,100 bbl/d for the first quarter of
2008. Further information about Addax Petroleum is available at www.sedar.com,
www.londonstockexchange.com or the Corporation's website,
www.addaxpetroleum.com.

    About Chrome

    Chrome is a subsidiary of the Chrome Group, which is a leading
conglomerate in Nigeria with vast interests in oil and gas, power, insurance,
destination inspection, bio-fuels, petroleum products trading, petrochemicals,
real estate, and logistics businesses. Chrome's operations include exploration
and production of oil and gas within the Gulf of Guinea and provision of
engineering and support services to other companies in the sector.

    About KOGAS

    KOGAS is South Korea's national gas company. Listed on the Korea Stock
Exchange, KOGAS is the world's single largest LNG buyer, importing
approximately 25 million tonnes of LNG in 2007. KOGAS has LNG purchase
contracts with 16 projects in 8 countries. KOGAS operates three LNG receiving
terminals including 40 LNG storage tanks and 2,712 kilometres of national
pipelines which together ensure a stable supply of natural gas for South
Korea. KOGAS is a partner in three existing LNG Projects in the Middle East,
i.e. Qatar, Yemen and Oman and is keen to expand both its LNG diversification
and to invest in the development of gas resources in Nigeria.

    Information about Reserves and Resources Estimates

    The contingent gas resources information in this news release is set out
in greater detail in Addax Petroleum's Annual Information Form dated March 13,
2008, which is available on the SEDAR website, www.sedar.com, the London Stock
Exchange Market News website, www.londonstockexchange.com or the Corporation's
website, www.addaxpetroleum.com.
    Contingent resources are those quantities estimated, as of a given date,
to be potentially recoverable from known accumulations using established
technology or technology under development, but which are not currently
considered to be commercially recoverable due to one or more contingencies.
Addax Petroleum's contingent gas resources for OML123 are comprised of natural
gas, liquefied petroleum gas ("LPG") and pentanes plus ("C5+") components, and
are located in fields in which wells have been drilled through the gas portion
of the reservoirs to help define the gas pay thickness, reservoir quality and
areal extent. There are no gas sales from the properties since no gas market
connection is available, and Addax Petroleum has yet to conclude negotiations
with the Nigerian National Petroleum Corporation ("NNPC") regarding the terms
governing the exploitation of gas under its production sharing contracts. It
is currently investigating commercialization of produced gas through several
markets. No economic evaluation has been performed on these resources as at
December 31, 2007. All produced gas is presently flared, consumed for lease
use or re-injected into the oil reservoirs to maintain reservoir pressure.
There is no certainty that these contingent resources will be commercially
viable.

    Legal Notice - Forward-Looking Statements

    Certain statements in this news release constitute forward-looking
statements under applicable securities legislation. Such statements are
generally identifiable by the terminology used, such as "anticipate'',
"believe'', "intend", "expect", "plan", "estimate", "budget'', "outlook'',
"may", "will", "should", "could" , "would" or other similar wording.
Forward-looking information in this news release includes, but is not limited
to, proposed development of an integrated gas utilization project, including
statements with respect to the endorsement of the Federal Government of
Nigeria, the Nigerian Government's gas marketing plan, the non-binding heads
of agreement between Addax Petroleum, KOGAS and Chrome, negotiations with the
Nigerian Ministry of Energy, Department of Petroleum Resources and the
Nigerian National Petroleum Corporation, the anticipated benefit of the
integrated gas utilization project on the Corporation's business strategy and
goals, the Corporation's future investment decision, financing and capital
activities, contingent liabilities and government approvals. By its very
nature, such forward-looking information requires Addax Petroleum to make
assumptions that may not materialize or that may not be accurate. This
forward-looking information is subject to known and unknown risks and
uncertainties and other factors, which may cause actual results, levels of
activity and achievements to differ materially from those expressed or implied
by such information. Such factors include, but are not limited to: the outcome
of negotiations, volatility of prices of natural gas; general economic, market
and business conditions; industry capacity; competitive action by other
companies; refining and marketing margins; the ability to produce and
transport natural gas to markets; actions by governmental authorities,
including changes in existing policy, increases in taxes; decisions or
approvals of administrative tribunals; changes in environmental and other
regulations; risks attendant with oil and gas operations, both domestic and
international; international political events; expected rates of return; and
other factors, many of which are beyond the control of Addax Petroleum. These
factors are discussed in greater detail in filings made by Addax Petroleum
with the Canadian provincial securities commissions.
    Readers are cautioned that the foregoing list of important factors
affecting forward-looking information is not exhaustive. Furthermore, the
forward-looking information contained in this news release is made as of the
date of this news release and, except as required by applicable law, Addax
Petroleum does not undertake any obligation to update publicly or to revise
any of the included forward-looking information, whether as a result of new
information, future events or otherwise. The forward-looking information
contained in this news release is expressly qualified by this cautionary
statement.





For further information:

For further information: Mr. Patrick Spollen, Investor Relations, Tel.:
+41 (0) 22 702 95 47, patrick.spollen@addaxpetroleum.com; Mr. Craig Kelly,
Investor Relations, Tel.: +41 (0) 22 702 95 68,
craig.kelly@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations,
Tel.: +41 (0) 22 702 94 44, marie-gabrielle.cajoly@addaxpetroleum.com; Mr.
Nick Cowling, Press Relations, Tel.: (416) 934-8011,
nick.cowling@cossette.com; Mr. James Henderson, Press Relations, Tel.: +44 (0)
20 7743 6673, james.henderson@pelhampr.com; Mr. Alisdair Haythornthwaite,
Press Relations, Tel.: +44 (0) 20 7743 6676,
alisdair.haythornthwaite@pelhampr.com

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