The National Oil Company of Liberia (NOCAL) took pains last week to explain some of the developments in the sector. These had, to some extent, to do with the ongoing negotiations in London, preparatory to the sale of what the company calls “old oil acreages (LB-6, LB-7,
LB-16 and LB-17. The first two were owned by the international oil company Anadarko, which decided to give up these blocks. Negotiations of the other two blocks, part of the 2007-8 bid round, were terminated, without the conclusion of any contracts. Standard petroleum practice, according to NOCAL, allows for the relinquished blocks to be made available for other oil companies to bid for them, since it is “bad practice to have previously leased blocks to sit idle without activity on them.”
That, explains NOCAL, is why it is engaged in ongoing negotiations in London with other oil companies interested in these four blocks.
These blocks are outside the moratorium which government imposed some months ago on further oil block leasing.
We thank NOCAL for these explanations. What is unclear to us, however, is to what extent is the company ensuring serious Liberian participation in the leasing of these four, those blocks already leased and all future blocks. In its press release signed by Cyrus Badio, NOCAL says that to ensure substantial Liberian participation in the sector, a Liberian company with 5% in any bid “will have [its] bids evaluated with a 20% uplift in their signature bonus proposal.”
This, said the oil company, would be “in addition to the NOCAL participation of 5% for a total Liberian participation of 20%.
This is confusing. If the “signature bonus proposal” will uplift the 5% in their signature bonus “for citizen participation to a total of 20%,” how is it that the total Liberian participation will be 20%?
In our view, it should be 30%, since NOCAL’s participation would be 10%, and 20% Liberian participation.
There is something else that we think should be seriously considered: NOCAL has considerable financial resources available to it. Can NOCAL, on behalf of Liberian citizens, purchase at least 30% more stake in these deals, and later on retain say 20% for itself and 30% for Liberian citizens? That would leave the foreign investors with 50% of the deal. It would leave Liberians with 50% participation in the oil drilling.
We pray that NOCAL would seriously consider this proposal, negotiate the same deal with all the other foreign oil companies, and give Liberians an equal share in the deals.
Liberian investors, who do not yet have the financial resources to put up the money, would have NOCAL investing in behalf of the Liberians, until they are ready to pay off NOCAL’s loan to them.
Liberians, therefore, thanks to NOCAL, would be active participations in the nation’s petroleum industry. They would thus be empowered to undertake investments in other sectors, thereby upscale their involvement in the economy, in which Liberians are currently mere spectators.