The National Oil Company of Liberia (NOCAL) said it welcomes the recent comments provided by Global Witness on the current bid round for the nation’s oil blocks (LB-6, LB-7, LB-16, and LB-17).
The solicitation of feedback on the Production Sharing Contract from many stakeholders, according to NOCAL, is a standard practice for a bid round.
“Hence, the Global Witness comments are being carefully considered by the Government, along with all other stakeholder feedback,” the oil company said in a statement.
NOCAL said the quality of the bid round is to get the best deal for Liberia.
“This bid round is being conducted in a carefully planned, diligent and professional way to the highest international standards. It has participation of one of the world's top international consulting firms, EY (formerly known as Ernst and Young). EY will receive, open and assess the bids and are providing independent oversight to the process. This guarantees legitimacy and transparency.”
The NOCAL statement under the signature of Mr. Cyrus Badio, a staff of the entity, said the planning phase also included detailed advice from external experts on geologic data, petroleum geology, commercial transactions, fiscal modeling; petroleum law and economics; as well as advice on legal issues and good governance of natural resources.
“The planning also included significant legal and governance support from independent advisors with considerable industry experience, and extensive discussions with key development partners, including the US Economic Capacity Governance Initiative and IMF. The fiscal terms were developed with assistance of external advisors and approved by Hydrocarbon Technical Committee to ensure Liberia gets the best deal possible.”
“Together, these provisions meet standards that match and even outdo quality bid rounds anywhere in the world, demonstrating the Government’s commitment to transparency.”
NOCAL maintained that the bid round was conceived to ensure that vacated acreage not lie ‘fallow’ when it could be explored to advance the development of Liberia’s oil sector. According to NOCAL, the blocks being offered for investment are old acreages— LB-6, LB-7, LB-16, and LB-17—and do not fall under the 2012 moratorium on acreage.
“The bid round was planned and executed with appropriate time and care, and conception and planning pre-dated the Ebola crisis. However, Ebola has now made the success of the bid round even more important. The long-term future of Liberia cannot be forgotten while dealing with a short-term crisis. The revenue generated will help plug the serious economic damage wrought by the scourge of Ebola in the short term,” NOCAL further said.
The oil company went on to say that in the long term, the careful design and terms of the contracts will ensure economic benefits to Liberia. Above all, there is no chance that the ability of the Government to negotiate effectively on behalf of the country has been reduced because of the crisis. NOCAL has had constant positive feedback from the industry about how well organized this round is.
According to NOCAL, the ‘Local Content Participation’ provision designed into the investment round will also help create Liberian jobs and lead to meaningful Liberian participation in the upstream and downstream petroleum business. “In a world first, bids from groups that include either a significant West African/ECOWAS upstream petroleum company that has committed to partner with a Liberian company, or a direct partnership with a Liberian company for a total of a 5% interest in the PSC by the Liberian company, will have their bids evaluated with a 20% uplift in their signature bonus proposal. This will encourage local partnerships and local content.
This is in addition to the NOCAL participation of 10% and Citizen Participation of 5% for a total Liberian participation of 20%. It is also in addition to the other financial benefits, such as royalty, tax, and production sharing which are all spelled out in the model Production Sharing Contract.
NOCAL will continue to work with all stakeholders to make this process successful for the country. As always, the aim is to develop our oil sector for the benefit of Liberia and the Liberian people. This bid round has the potential to generate major long-term benefits for Liberia, benefits we will need more than ever when we emerge from our time of crisis.”