Authorities at the National Oil Company of Liberia or NOCAL announced Thursday that they have completed a deal with the Canadian Overseas Petroleum Ltd. (COPL) and ExxonMobil for the controversial offshore oil Block-13.
NOCAL's President, Dr. Randolph McClain told a jammed packed press conference at the Ministry of Information Thursday that the controversial deal comes with an unprecedented signature fee of US$50million.
The announcement of the deal comes amidst a moratorium on all future negotiations on oil blocks by the National Legislature due to controversies surrounding previous contracts in the oil sector. But Dr. McClain insists that block- 13 does not form part of this moratorium.
"In many respects, this contract is different from and better than the previous moving us closer to realizing our ambition of a new model agreement which is fair to the investor and beneficial to the country and our people," Dr. McClain said.
He said the contract which has been presented to President Ellen Johnson-Sirleaf for signature and onward submission to the National Legislature for ratification is superior to the original and addresses many of the concerns around Block -13 which had prompted two years of uncertainty.
The oil block 13, which had been at the center of much controversies between NOCAL officials and members of the 53rd Legislature as to who is most suited to win the block's exploration contract had originally been awarded to Pepper Coast.
Some members of the Legislature particularly Montserrado County District #6 Representative Edwin Snowe had preferred Gazprom, a Russian oil company, saying that the company had offered a better deal ahead of other competitors.
But Dr. McClain said the COPL-ExxonMobil deal rather offer the best for Liberia and takes into considerations many of the issues and concerns that have been raised about the sector.
"This contract is amongst the first in the world to include provisions where citizens could receive dividends from production if the exploration ...leads to a successful discovery and production of oil," the NOCAL president said.
Going further into the terms of the contract, Dr. McClain said the US$50 million to be received immediately upon ratification and printing into handbills includes US$21.5 million as signature bonus, which is the largest ever upfront payout to a non-producing country in the world. He said until now the largest signature bonus Liberia has ever received from a single oil block is US$3.33 million.
He added that the rest of the US$50 million is paid for taxes and transfer fees. Giving an upbeat appraisal of other benefits, the NOCAL boss said the negotiating team of the government was able to secure a 5% Citizen Participation Share in Block -13.
He said also in the contract is a 10% royalty on oil produced from wells drilled under water depths of 0-1500 meters. He listed other benefits as funds for training programs, US$100,000 per year during exploration and appraisal, and US$75, 000 per year during development and production.
For Social welfare programs an amount of US$150, 000 per year during exploration and appraisal and US$500,000 per year during development and production, while US$150, 000 is also earmarked for the University of Liberia per year.