Government of Liberia Amends the New Petroleum (Exploration and Production) Reform Law, 2014
MONROVIA – The President of the Republic of Liberia has signed into law an amendment to the New Petroleum Reform Law of 2014 removing structural inconsistencies and unconventional practice for the purpose of optimizing performance within the sector. Additionally, the amendment conforms to best international practice and responds to the national circumstances.
The new law, titled, “An Act to Amend CERTAIN PROVISIONS OF THE NEW PETROLEUM (EXPLORATION AND PRODUCTION) REFORM LAW OF LIBERIA, 2014” integrates key administrative and operational changes affecting the structure of the Board of Directors of the Liberia Petroleum Regulatory Authority (LPRA), configuration of block sizes, Liberian citizen participation, and systems/forms of granting petroleum rights. Specifically, the amended version of the law increases the board members of the Authority from three (3) to five (5). In addition, the amended Act requires that “the Surface of offshore blocks shall not exceed 3,500 sq.km and the surface of onshore blocks shall not exceed 2,000 sq.km.” This is a change from the previous size allowing for a maximum of 2,000 sq.km for offshore and maximum of 1,000 sq.km for onshore areas.
Article 14 of the 2014 petroleum was amended in respect to granting petroleum rights. Previously, the 2014 law allows for the granting of petroleum rights, in terms of production sharing agreements, only through competitive bidding. Considering the lack of commercial discovery to date and the dormant state of the petroleum sector since 2016, the need to re-evaluate the country’s ability to attract international investors was key to providing different forms or systems through which petroleum rights are granted. Keeping this in mind, the President of Liberia, Dr.George M. Weah, agreed with the Second Session of the Fifty-Fourth (54th) Legislature allowing for petroleum rights (petroleum sharing agreement) to be granted through 1) International Competitive Bidding, 2) Direct Negotiation, or 3) Executive Allocation to NOCAL. Under the new law, the Liberia Petroleum Regulatory Authority (LPRA) is allowed to grant petroleum rights either through competitive bidding or in special cases, through direct negotiations following prequalification of interested investors. LPRA is also allowed to negotiate petroleum sharing agreement with NOCAL following declaration of an Executive Allocation by the President of Liberia.
The new amendment ushered in a watershed moment for the petroleum sector which has since been non-active for the past years. Following the signing of the amended act, LPRA will now commence the process of ensuring that the entire offshore acreage (all blocks) are aligned with the requirements of the new law. After the re-demarcation exercise, which is expected to commence immediately or anytime soon, the next step will be to open the blocks for international tender (bid rounds) and solicit requests from investors for direct negotiations, where applicable.
It can only be anticipated that the amended law will attract investment within the sector increasing Liberia’s hope of making a commercial discovery, something that could boost the economy and promote the Pro-Poor Agenda for Prosperity and Development (PAPD).