10 May 2012

Liberia: Nation Risks Lawsuit If...

The Minister of Information Culture and Tourism (MICAT), Lewis G. Browne, has said that if care is not taken, the Government of Liberia risks lawsuit for non-compliance with existing contracts it has already signed with international companies in the country's oil sector. The MICAT boss' comments come on the heels of call by members of the House of Representatives for the ten existing production sharing contracts to re-negotiate to derive what they call the benefits provided for under sections 3.3, 3.4 and 3.7 of the Petroleum Law of 2002. On Tuesday, May 8, 2012, members of the House of Representatives unanimously endorsed a formal communication from one of their colleagues regarding reforms in the oil sector. The communication was endorsed by members of the House of Representatives in plenary.

Plenary is the highest decision making body of the House of Representatives.

The august body also resolved to stop the passage of any oil production sharing agreement if their decision to re-negotiate the ten existing oil production sharing contract agreements is not duly considered by President Ellen Johnson-Sirleaf.

The communication dated May 8, 2012 and addressed to House Speaker Alex Tyler was written by Representative J. Emmanuel Nuquay of Margibi County.

Rep. Nuquay is also the Chairman of the House Committee on Ways, Means and Finance.

In his communication, a copy of which is in possession of this paper, Rep. Nuquay said: "I enjoin you to do the Honorable thing by calling on our leader, President Ellen Johnson-Sirleaf to ensure the ten existing production sharing contracts are re-negotiated to derive the benefits provided for under sections 3.3, 3.4 and 3.7 of the Petroleum Law of 2002."

According to him, it is important to re-negotiate these contracts on grounds that they do not sufficiently protect the interest of the country.

Said the House Committee Chairman on Ways, Means and Finance in his communication: "This request cannot be baffled because Mr. Speaker, as you may be aware, our first term government led by President Johnson-Sirleaf as president of Liberia, rejected the negotiated and ratified Firestone and Mitta Steel Agreements that was done by the then Gyude Bryant Government on grounds that those agreements, though legally negotiated and ratified, did not provide adequate benefits for Liberia." He continued: "These Agreements on account of the position of our first term of government's position to derive maximum benefits for the country were negotiated and ratified with more benefit coming to the country. I salute and thank President Sirleaf for such a wonderful patriotic duty."

He said the Liberian government and people are confronted with the same situation where ten production sharing contracts "grossly and flagrantly violate" our Petroleum Law.

Against this backdrop, he said everything must be done to utilize the existing opportunity by requesting the president to re-negotiate these production sharing contracts to comply with the provisions of the Petroleum Law.

But Minister Brown told the Truth FM's Truth Breakfast Show Wednesday, May 9, 2012: "If we are not careful, we are going to run the risk of being sued forever in the world for failure to comply with various contracts."

He stated that if there were mistakes made in the country's oil and gas sector in the past, such mistakes must be corrected, but not by Liberia reneging on the implementation of signed agreements entered into by the Government with those he referred to as "third international partners."

Said the Information Minister: "If there were mistakes made in the past, those mistakes must be corrected, but how do we correct a mistake that has now tied us to a third international partner, without indicating to the world that we will sign onto agreements and we intend to renege on the implementation of those agreements when those agreements encumbered commercial and financial obligations on the part of third parties. Liberia cannot."

"Liberia cannot be seen as a country not respectful of contracts that it has entered into; whether those contracts were deemed good or deemed bad subsequently or in time. As a government, one of your primary duties is to fulfill and implement contracts that you have entered into," he added.

He made it clear that "there is a need for reform in the oil sector" of the country, adding, "In the oil capital of the world, President Ellen Johnson-Sirleaf called for reforms" in the sector.

He disclosed that President Johnson-Sirleaf articulated many of the issues that are being spoken about in the Legislature, to developing partners in Houston, Texas, that is regarded as the oil capital of the world.

He further disclosed that the Liberian leader "indicated that we have to bring a sense of uniformity to the various contracts that have conflicting issues, and conflicting benefits that we inherited."

"The President said in Houston to oil companies that we will reform this sector, but we want to do so in partnership with those who have contracts," he stressed.

He pointed out that: "The 2002 Petroleum Law that was passed, was passed not taking into account fully the fact that Liberia is still a frontier country," adding: "All of these things we are talking about oil, we do not have oil. It has required heavy capital investment and the taking of risks to be able to say that we have oil."

He stated that there is no conflict in the government regarding review and reforms in the country's oil sector, adding: "The National Oil Company of Liberia (NOCAL) is well advanced in that process; they are not just talking about it, they are acting on it."

He divulged that the best module for the administration of the oil sector worldwide comes from Norway, indicating that: "Norway is now in partnership with NOCAL, as we speak, audits of NOCAL are well advanced and underway."

He further divulged that reforms in the oil sector will entail increased transparency and accountability in the process, as well as the net benefit of the country's oil proving to be fair following the exploring and defining of the commercial quantity by developing partners.

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