Over the last two decades, the Caspian has attracted the lion’s share of PR buzz as a major new oil area, but West Africa’s Gulf of Guinea has also become of increasing interest to offshore explorers.
While Equatorial Guinea has quietly been ramping up production for the past few years, Liberia has just announced successful offshore oil strikes as well.
The National Oil Company of Liberia (NOCAL) on 21 February issued a press release noting, “The National Oil Company of Liberia (NOCAL) welcomes the announcement by African Petroleum that their Narina-1 exploratory well drilled in Block LB-09 off the coast of Liberia indicated a potentially large accumulation of oil deposits, while emphasizing that development of any discovery will take several years.
The exploration and preliminary discovery by African Petroleum provides further evidence of Liberia's strong offshore prospects, part of the same geological system that has yielded significant discoveries in neighboring Sierra Leone and Ivory Coast. It reflects the policy of the Liberian government to form strategic commercial partnerships with the private sector to explore those prospects and use any discovery for the maximum benefit and development of Liberia and its people.
Although early indications are positive, the exact extent of the deposits found in LB-09 is not yet known. African Petroleum will now conduct tests to further evaluate the quantity of the oil discovered, a process expected to take several months. This evaluation will indicate whether the deposits are in sufficient quantity to be commercially viable for production.
Once appraised, the deposits will then take five to seven years until production can begin.”
NOCAL President and CEO Randolph McClain added, “This news is good news for Liberia, and we are cautiously optimistic. We do not yet really know how much is down there. But we know, according to African Petroleum, that this discovery is of very good to excellent quality oil. We will be working with African Petroleum to develop a better picture. So now, we urge everyone to be very patient. It will take time to fully appraise this discovery, and years before a drop of oil is produced from the well.
In the meantime, we have to work double time to get our house in order in terms of reforming our policies, laws and regulations for total transparency in the oil sector. We are also determined to develop the safety, health and environmental policies to avoid any adverse or catastrophic incidents. We look forward to working with all the stakeholders – within government, in the private sector, in civil society organizations and, most importantly, the public. We plead for your participation. Let’s work together to set a vision.
Our goal remains the goal set out by the President, H.E. Madam Ellen Johnson Sirleaf: that the revenue from any oil found in Liberia will be used for the development of Liberia and the maximum benefit of the Liberian people. If commercial quantities become available, the income from these quantities can be used to improve the lives of our people, to attain self-sufficiency, and to ensure sustainable development. To achieve that, we remain committed to the principles of transparency, sustainability, inclusiveness and safety, health and environmental care in all our activities to manage the petroleum sector.
We want to commend African Petroleum and all our partners in the private sector for continuing to work with professionalism and efficiency to explore Liberia’s prospects, and reiterate our commitment to fair, equitable and strong commercial partnerships going forward.”
Western energy companies have already gauged the potential of the oil strikes as U.S. companies Chevron and Anadarko have already partnered with African Petroleum to develop the resources.
Liberia could certainly use the money, as after a 1980 military coup usurped the country’s American descended-Liberian leadership, the nation slid into political and economic instability and civil war which killed roughly 250,000 people dead and largely destroyed the country's economy before democratic elections in 2005 restored a semblance of law and order. Despite seven years of relative peace, roughly 85 percent of the population still lives below the poverty line.
But the path to making Monrovia flush with petrodollars may still hit a few corruption bumps, despite the optimism. A report by Liberia’s General Auditing Commission released several days ago regarding $18 million of petroleum products supplied to the Liberia Petroleum Refining Corp. has not only recommended that it not pay Monrovia Oil Trading Co. CEO Charles Carron but that Carron be prosecuted for failing to provide documents to support his claims that the debt has not been cleared.
So, like so many issues in Africa, Liberia’s oil future ultimately devolves on the question of whether one is an optimist or pessimist.
By. John C.K. Daly of Oilprice.com