Liberia Putting 9 Oil Blocks up For Sale Amid Concerns Over Petroleum Law Breach
Monrovia – 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.
FPA reached out to various 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.
FPA has learned 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…”
FPA has learned 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 verifications.
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 fulfilment 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.