IPNews-Monrovia: Amidst discontent by Liberians, mainly members of the Council of Patriots-CoP, that the government of Liberia, under the leadership of President George Manneh Weah had crafted plans to auction nine oil blocks in the country, President George Weah few minutes ago disclosed that government has concluded plans for the competitive biding of the Harper oil Basin.
It may be recalled, the stiff opposition-pressure group, Council of Patriots (CoP) organizers of the January 6, 2020 protest vows to mobilize Liberians against the sale on new oil blocks.
Runaway CoP Chairman Henry Costa alleged at a press conference held on January 12, 2020, that President George Manneh Weah has 50 percent share in each of the new oil blocks that could raise serious issue of conflict of interest.
Costa stated that CoP will begin a door- to- door campaign to educate Liberians about the planned oil deal by the government.
In testimonial to the sale of the expected Harper oil Basin, the Liberia leader stated that government of Liberia made tremendous strides in modifying the new petroleum reform law of 2014, given raise to the separation of Liberia Petroleum Regulatory Authority (LPRA) and the National Oil Company of Liberia (NOCAL) to operate independently but collaboratively in realizing this national objective.
President Weah said the new reform has now set up systems granting petroleum rights, mandatory Liberian Business participation, adjustment to the maximum size of offshore and onshore blocks, amongst others, in order to ensure that the law conforms to international standards and best practices.
He added that the new reform system is necessary to place Government in the position to seek the right investors through the adoption of a predictable, flexible and investment-attractive regulatory regime.
“During the year under review, significant progress was made towards achieving this objective. As required by the New Petroleum Reform Law, 2014, separation of the regulatory responsibility from the commercial operations was finalized through the signing of a Transfer Plan, thereby allowing the Liberia Petroleum Regulatory Authority (LPRA) and the National Oil Company of Liberia (NOCAL) to operate independently but collaboratively in realizing this national objective.”
“Subsequently, a review of the New Petroleum Law necessitated several changes, including systems for granting petroleum rights, mandatory Liberian Business participation, adjustment to the maximum size of offshore and onshore blocks, amongst others, in order to ensure that the law conforms to international standards and best practices. These changes were necessary to place Government in the position to seek the right investors through the adoption of a predictable, flexible and investment-attractive regulatory regime.” The Liberian leader told the joint session of the Liberian Legislature today.
President further stated that new amendments in the new petroleum law will also work in concert with the NOCAL in re-demarcating the entire offshore oil blocks into layers and sizes to conform with the international standards of the ‘Global Grid system’,
Pres. Weah: “Following the 2019 amendments to the New Petroleum Law, LPRA, working in concert with NOCAL, re-demarcated the entire Liberia offshore blocks layout and sizes to conform to the Global Grid System, in adherence to an ECOWAS mandate to all member States. This exercise has resulted into 33 offshore blocks from the previous 30 blocks. It also allows for petroleum rights to be granted through International Competitive Bidding, Direct Negotiation, and Executive Allocation (to NOCAL).”
“My Fellow Liberians, I am pleased to announce to you today, that the Government of Liberia, through the Liberia Petroleum Regulatory Authority (LPRA), will open up the entire Harper Basin during the next Licensing Round beginning in April. Nine (9) offshore blocks will be put up, allowing competent and reputable international oil and gas companies to bid with the hope of recommencing exploration programs, following years of inactivity. Details of the Licensing Round will be made available in the coming weeks through a partnership between LPRA and NOCAL.”
It may be recalled, on January 7th 2020, World Oil published that in April, Liberia will offer nine (9) blocks in a new bid round. The press release stated that President of Liberia will make the formal announcement of the licensing date based on the recommendation of the “Authority” (LPRA) working in concert with NOCAL and TGS.
The “Authority” is the Liberia Petroleum Regulatory Agency (LPRA). Created by the Exploration & Production Law of 2014 (ratified in 2016), many Liberians know very little about the Authority, who works for the Authority and that the Authority has all regulatory oversight of the sector and that the Authority is in charge of all of Liberia’s bid rounds.
The bid rounds (or licensing round as its sometimes referred to) allows a single oil company or a group of oil companies (joint venture) to apply for a Production Sharing Agreement (Petroleum License) in a competitive and transparent environment giving them the right to search for commercial deposits of oil. Liberia’s last bid round was concluded December of 2014 with over $60 million dollars in commitments but concluded unsuccessfully due to political wrangling between the Executive and Legislative branches of government.
Since the departure of Exxon and Chevron from Liberia in 2016/2017, there have been no exploration work offshore Liberia and the sector has been hanging on by a thread. Experts say the importance of Liberia’s next bid round cannot be overstated and will determine all future successes for Liberia’s fledgling oil sector. The decline of oil prices in 2014 resulted in billions of dollars lost for exploration programs worldwide but with the resurgence of new investment and development monies, Liberia’s bid round will be held in a very competitive environment of over sixty (60) countries offering blocks to only a handful of oil companies. Liberia will only have one opportunity to put its best foot forward.
The nine (9) blocks referenced by the Authority (LPRA) for sale are located in the highly prospective Harper Basin and include blocks 25, 26, 27, 28, 29, 30, 31, 32 and 33.
INTERNATIONAL CONCERNS
On the baseline of the press release, international policy partners to ascertain their reaction to the World Oil press release and all expressed various concerns, namely the DEECO issue which highlighted the inexperience of the Authority, especially to preside over a bid round and the Authority’s early circumvention of the Petroleum Exploration & Production law (2014), the very Law that created the Authority.
The “DEECO issue” began when DEECO Liberia Limited, a subsidiary of Nigerian registered DEECO Oil and Gas Limited applied to the Authority for a Reconnaissance License for an area in Gbarnga, Bong County and the payment of one hundred United States dollars ($100,000.00USD) to the Authority for the rights to do so.
The Authority (LPRA) granted DEECO a Reconnaissance License (No. LPRA-001) to collect preliminary geological and geophysical data within the Jorquelleh District contrary to standard oil and gas practices and in violation of the Petroleum Exploration & Production Law (2014).
Without drafting or publishing the Regulation for Reconnaissance Licenses, the pre-qualification requirements or conducting technical and financial due diligence on DEECO, the Authority (LPRA) collected $100,000USD and deposited the funds in its own account instead of the Consolidated Account as required by the Public Finance and Petroleum E&P Laws.
Shortly after issuing the License, on June 1, 2019, DEECO issued a press release to the Heritage Newspaper that it had found oil in Gbarnga. The Authority (LPRA) and DEECO subsequently refuted the claims of finding oil in a press release published by FPA and the Daily Observer on June 10,2019.
Report also have it that a Reconnaissance Licenses does not allow drilling making it impossible to discover oil yet in the FPA and Daily Observer articles, DEECO head is quoted as saying “I re-iterated that it is only after we have conducted seismic survey, and hopefully drilled exploratory wells that a test may confirm oil in commercial quantity,” not realizing that his license does NOT allow for the “drilling of a well”.
To date, DEECO has been unable to commence work due to financial and technical shortcomings according to a source within the Authority (LPRA) who laughed lightly at the mention of the name DEECO.
The Liberia Petroleum Regulatory Authority has failed to draft, get approval for and publish vital regulations as stated by the Petroleum E&P Law (2014). Section 75.1 in particular states that “The Authority may make regulations for giving effects to the provisions of this Act”. FPA has learned from a source within the Authority (LPRA) that the agency believes that the “may” stated does not mandate but allows the LPRA to choose to or not draft the needed regulations to give effect certain provisions.
The DEECO issue is not the only instance of violating Liberia’s E&P Law:
The Authority has failed to draft, get approval for and publish vital regulations as stated by the Petroleum E&P Law (2014). Section 75.1 in particular states that “The Authority may make regulations for giving effects to the provisions of this Act”. FPA has learned from a source within the Authority (LPRA) that the agency believes that the “may” stated does not mandate but allows the LPRA to choose to or not draft the needed regulations to give effect certain provisions.
Legal experts say that if true, the Authority (LPRA) is making a grave mistake and that the “may” must be read in the context of the statue which makes it mandatory. A prime example of that is the Section 4 (The Grant of Petroleum Rights) of which 4.1 of the Law requires that “The right to explore for, produce and transport petroleum shall be acquired and held only in accordance with a petroleum right granted under this Act and applicable regulations”
Some of those applicable regulations are stated in Section 7.14 “The Authority may authorize by regulation and asses processing fees for the granting of licenses other than petroleum agreements, for pre-qualification of bidders in connection with bid rounds, for the submission and evaluation of bids in a bid round, for the amendments of the terms of petroleum rights after they are granted, for the approval of appraisal programs and development and production plans and amendments thereto, for the review and approval of transfer requests under petroleum rights and for the taking of other comparable actions at the request of a holder of petroleum rights…”
Additional information states that the Authority (LPRA) has posted request seeking consultants to help them draft only three (3) of the regulations required by the Petroleum E&P Law (2014): Beneficial Ownership, Liberian Participation and a company or person to conduct Pre-Qualification verification.
Section 75.2 of the Law states that the regulations should be done in consultation with the relevant government agencies and public hearings discussing the drafting of each regulation. To date, no such exercise has been carried out by the Authority (LPRA) indicating that no regulations have been made for the sector in fulfillment of the Authority’s regulatory mandate.
THE AUTHORITY DECISION MAKERS
It is said that only a handful of individuals within the Authority control the direction of the Authority (LPRA) with Senate Pro-Temp Albert Chie being the real Master of Ceremony. Rumors have it that Senator Chie recommended and/or approved the employment of almost all senior official at the regulatory body with the exception of Donmo.
The current and second Director General of the Authority (LPRA) is Archie N. Donmo, who replaced the first Director of the Authority (LPRA) and a hand-picked Pro-temp Chie choice, Edward Smith. Donmo was a banker for many years with Ecobank who graduated from the University of Liberia with a BSc degree in Economics. His advisor is Urias Goll a former Deputy at EPA under the Sirleaf government.
Another Pro-temp choice was Director of the Board Dr. Fodee Kromah, the former President/CEO of NOCAL and the central figure in the NOCAL bribery scandal involving payments to the House of Representatives to pass the approval and ratification of blocks belonging to Oranto and Broadway. The scandal, uncovered by then AG Morlu, dogged NOCAL even after the departure of Kromah from the organization in 2011 and negatively impacted the entry of ExxonMobil’s purchase of the Broadway Block.
Furthermore, it may be recalled, recently, the Government of Liberia through the Liberia Petroleum Regulatory Authority (LPRA) announced sale of several oil blocks, beginning next licensing round.
A statement from the LPRA says the decision followed an unsuccessful ratification of negotiated petroleum sharing contracts in 2014, which climaxed the last round of bidding process.
The LPRA discloses the next round of bidding, expected to commence in April 2020, will affect blocks within Harper Basin, Maryland County, southeast Liberia.
The 2019 amendment to the New Petroleum Law triggered a re-demarcation process, resorting into nine (9) blocks within the Harper Basin and 24 blocks within the entire Liberia Basin. The Harper Basin, which covers nine blocks from LB-25 to LB33, will be tendered during the 2020 licensing round.
The statement says this is a watershed moment for Liberia and the LPRA is excited to reach an agreement with all parties, including TGS and NOCAL in promoting Liberia’s offshore average and attracting investments that would support for the Pro-Poor Agenda for Prosperity and Development (PAPD) under the leadership of President George Manneh Weah.
It notes the Government of Liberia made a shrewd and progressive decision, through a robust reform process to provide efficient institutional governance system, maximize revenue from potential petroleum resources, and promote citizens’ participation.
The LPRA continues that the reform, besides slump in oil prices and the Ebola crisis, resorted to temporary dormancy within the sector. But after the passage of the New Petroleum and Reform Law of 2014, and the setting up of the LPRA, Government is now in a position to proceed with the tendering process.
In a meeting held between the bankrupt National Oil Company of Liberia or NOCAL, LPRA and TGS (the geophysical company hosting Liberia’s offshore seismic data and rendering technical support), it was unanimously agreed that all parties have established the need for capabilities and internal mechanisms to ensure Government conducts a successful bid round to attract investors.
