The Government of Liberia announced Friday, August 27, that it has entered into an agreement with the Chevron Corporation to explore three deepwater concessions in Liberian waters. Under the agreement, the company will conduct a three-year exploratory program that is expected to begin in the fourth quarter of 201
The agreement has been approved by the Executive Mansion and submitted to the Legislature for consideration and ratification.
These investments, along with the rehabilitation of the Freeport of Monrovia and the first direct flights from the U.S. to Monrovia in 20 years starting September 5 through Delta Air lines, will provide real economic opportunities for the people of Liberia.
President Ellen Johnson Sirleaf said: "We are delighted to welcome Chevron as a partner for Liberia to explore our oil and gas assets. Along with its investment, Chevron will bring the latest technologies, best practices in transparency and efficiencies, and an excellent record of community and social responsibility."
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The Liberian President continued: "Energy is one of my top priorities, and with Chevron's technical skills, we will be able to build our own capacity in the sector, making a meaningful contribution to economic growth and job creation. This is a crucial partnership for Liberia."
Chevron's entry into Liberia consolidates a growing trend of major international investment projects in the country's strategic sectors. It is a further vote of confidence in the nation's future, adding to the list of Liberia's other business partners, including ArcelorMittal, Firestone, BHP Billiton, Sime Darby, Anadarko Petroleum, China Union, and, most recently, a $1.6 billion agreement with Golden Veroleum.
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God has bless every Nation with the resources that is needed to better the lifes of its citizens,the oil just discovered has always been there, it is my ardent prayer and hope that revenue from that oil, will not cause another problem for us in Liberia, like what our Brothers in Nigeria are going through in the Niger Delta.
Below are some of the highlights of the Chevron deal for critical analysis:
Transaction Highlights
Ø Chevron Liberia Ltd. as operator for all three Production Sharing Contracts (PSC).
Ø Chevron will farm into the PSCs and obtaining 70% Interest in each PSC.
Ø Chevron will direct fund ALL required activities off its own balance sheet. No bank letter guaranteed required etc.
Ø Chevron will pay a $10mm USD assignment bonus within 30 days to the Government of Liberia (GOL) upon ratification of by the Legislature.
Ø Within 30 days Chevron will contribute $2.1MM per year for up to 5 years to a Social Development Fund/program to be mutually decided and agreed upon. This is far above any development program provided within existing PSCs.
Ø Chevron will commence drilling in 2011. This will faster than any other natural resource development program.
Ø Additional sharing of potential oil resources with the Government of Liberia through:
o A 10% participating equity interest for the GOL via NOCAL, at commercial production.
o A 5% royalty on the proceeds from sale of oil and gas.
Ø Chevron funds all required activities through commercial production. In other words, zero financing. They will fund direct from their balance sheet.
Implications of Chevrons Operations in Liberia
Ø Chevron opens an office in Monrovia with an initial staffing of 10-15 employees with as many additional support services staff.
Ø With successful operations, increasing local capacity to support operations through construction and staffing of a shore base to support those successful operations increasing economics and employment and demand for local support services such as land, air, and marine transportation, communications, materials provisioning, etc.
Ø Chevrons best practices in transparency and efficiency
o Income taxes paid directly to the general Tax Revenue Account of the Government of Liberia
Ø Chevrons partnering with local businesses and suppliers, bringing best practices for fostering development of local services.
Ø Chevrons vision of being the Global Energy Company most admired for its people, partnerships, and performance
Ø Chevron foundational values of protecting people and the environment, and High Performance
Source: FrontpageAfrica