Defiant, Hopeful Liberia Moving on With Online Oil Bid Rounds Amid COVID-19, Falling Oil Prices
Monrovia – With the world’s leading exporters, OPEC and Russia agreeing to cut production by a record amount and the United States oil-producing businesses taking drastic commercial decisions to cut output, a bid round by Liberia to spark interest in its budding oil programs appears to be in limbo.
“We cannot be discouraged and dismayed because of this scourge but must keep fostering the growth of our nations and business institutions. We will take all precautions and measures to mitigate the impact of the pandemic but must not stop or relinquish the desire to build a nation under a common purpose creating shared economic prosperity.”President George Weah
Last Friday, Liberia kicked off the Harper Basin License Round, it trumpeted as a significant moment in Liberia’s hydrocarbon journey.
9 Oil Blocks Being Offered
In a statement announcing the bid round opening last week, President Weah acknowledged that the world is undergoing a tremendously turbulent time but with resilience, tenacity and shared strength, the deadly corona virus will be defeated. “We cannot be discouraged and dismayed because of this scourge but must keep fostering the growth of our nations and business institutions. We will take all precautions and measures to mitigate the impact of the pandemic but must not stop or relinquish the desire to build a nation under a common purpose creating shared economic prosperity.”
The President has since instructed the Liberia Petroleum Regulatory Authority (LPRA) that all initial engagement, promotional events, consultations, and business meetings relating to the Liberia Offshore License Round 2020 must be conducted online via the dedicated bid round website or other virtual platforms. “Absolutely, there will be no physical meetings during the initial phases of the bid round until this deadly disease is defeated. This decision is similarly to what is currently being adopted by sisterly countries conducting license rounds within Africa and around the world.”
The Liberia Petroleum Regulatory Authority recently announced the launch of its next offshore licensing round, which started on April 10, 2020 in parallel with attractive amendments to Liberia’s Petroleum Law, following major regulatory changes in October 2019, and the extension of the exploration period, in order to attract international investors.
The Liberia License Round, 2020 is being conducted through three main stages: Pre-qualification, Bid Submission, and Bid Evaluation/Award.
The rounds which is running through February 28, 2021 is requiring companies interested in participating in the license round to complete and transmit a letter of expression of interest, fill out the pre-qualification form and ultimate beneficial ownership form as indicated in Annex 6 of the Tender Protocol for pre-qualification.
Nine blocks are being offered in the Harper Basin, one of the last unexplored and undrilled regions offshore West Africa: LB-25, LB-26, LB-27, LB-28, LB-29, LB-30, LB-31, LB-32, LB-33. The new block demarcation is following the petroleum bill update in 2019, with a maximum block size of 3,500 square kilometers, and aligning with the longitude and latitude grid.
TGS holds a range of multi-client data across the tendered acreage to support the licensing round that includes 5,961 kilometers of 2D seismic, gravity and magnetic data and 6,167 square kilometers of 3D seismic, gravity and magnetic data
Oil Barrel Price at All-Time Low
The Liberia bid rounds already compounded by the ongoing Coronavirus pandemic faces mounting challenges as the ongoing drop in prices of the crude commodity continues to force down prices and demand for oil has dried up.
The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel while June prices for WTI were also down, but trading at above $20 per barrel.
Meanwhile, Brent Crude – the benchmark used by Europe and the rest of the world, which is already trading based on June contracts – was also weaker, down 8.9% at less than $26 a barrel.
The oil industry has been struggling with both tumbling demand and in-fighting among producers about reducing output. Days after OPEC members and its allies finally agreed a record deal to slash global output by about 10%. The deal was the largest cut in oil production ever to have been agreed.
Experts say it would take a recovery in demand to turn the market round largely depending on how the Coronavirus pandemic subsides.
But nothing is quite set in stone. Experts foresee further supply cuts as private sector producers respond to the low prices. Whether the pandemic makes a dramatic turnaround for the better could impact how the market turnaround unfolds.
In the US, the decline in oil prices – which have fallen by about two-thirds since the start of the year – has had an impact at the pumps, albeit not as dramatic as Monday’s decline might suggest.
Despite US President Donald Trump’s pronouncement that the government will buy oil for the country’s national reserve, experts are unsure whether storage facilities in the US have the capacity to stockpile.
“Nothing, not even Covid-19, can shut down our lives and civilization. We will prevail and curtail the impact of the virus. That is why Liberia and many other sisterly countries are taking measures to mitigate the spread of the disease but at the same time, continue generating economic activities that keep the country stable and steadily running.”Archie N. Donmo, Director General of the Liberia Petroleum Regulatory Authority (LPRA)
In the meantime, the price of US oil has turned negative for the first time in history, meaning companies interested in bidding for Liberia’s Harper basin could cash in on the cheap to Liberia’s detriment as oil producers pay buyers to take the commodity off their hands over fears that storage capacity could run out in May.
In his Annual Message in January, President Weah reaffirmed his desire and commitment to ensure that the upstream petroleum sector is managed in a way that promotes efficient institutional governance, integrates the principles of accountability and transparency, maximizes revenue from potential petroleum resources, and supports Liberian citizens’ participation.
Harper Basin Undrilled, Unexplored, but…
The goal for the President was to open up the entire Harper Basin during the Liberia Licensing Round 2020 where nine (9) offshore blocks in hopes of recommencing exploration program.
For President Weah, the Harper Basin offers significant exploration potential in one of the few remaining unexplored deep-water basins in West Africa.
Said the President: “The initial interpretation of 2D and 3D seismic data identifies many leads and prospects across the entire basin. Several sub-commercial discoveries from previous wildcat wells in the Liberia Basin have proven that the petroleum systems are working offshore Liberia. Recent discoveries offshore Cote d’Ivoire prove source maturity, the viability of the reservoir quality, and charge potential of commercial size. The Albian reservoir offshore Cote d’Ivoire, for example, is producing and considered a good analogue for the maturation story and identified traps in the Harper Basin.”
While encouraging international upstream oil and gas companies and other private equity firms to participate in the license round, industry analysts are unsure Liberia will get the best at this time.
Archie N. Donmo, Director General of the Liberia Petroleum Regulatory Authority (LPRA), appeared confident that Liberia is ready to take a leap into the future of its petroleum exploration program while appearing hopeful that the ongoing pandemic would not slow down the bid rounds. “Nothing, not even Covid-19, can shut down our lives and civilization. We will prevail and curtail the impact of the virus. That is why Liberia and many other sisterly countries are taking measures to mitigate the spread of the disease but at the same time, continue generating economic activities that keep the country stable and steadily running.”
Donmo says the Harper Basin is an offshore treasure to be discovered and unearthed. “Previous drilling in the Liberia Basin identified working petroleum system along with a geological discovery. The Harper Basin, with an extensive coverage of 2D and 3D seismic data identifying many leads and prospects, remains one of the few undrilled and unexplored regions in West Africa, a terrain where many offshore commercial discoveries have been made. Recent discoveries offshore Cote d’Ivoire prove source maturity, the viability of the reservoir quality, and charge potential of commercial size. The Albian reservoir offshore Cote d’Ivoire, for example, is producing and considered a good analogue for the maturation story and identified traps in the Harper Basin.”