Liberia will receive a whopping US$50 million from a signature bonus if ongoing negotiated contract between ExxonMobil and Peppercoast Broadway is signed by President Ellen Johnson-Sirleaf and approved by members of the National Legislature.
The President and Chief Executive Officer (CEO) of the National Oil Company of Liberia (NOCAL), Dr. Rudolph McClain, said the renegotiated contract provides other long-term financial benefits, strong social and environmental protections as well as provisions to promote local content and job creation in Liberia.
Speaking at the regular Thursday press briefing at the Ministry of Information, Culture and Tourism, he explained that the contract is a result of a lengthy period of negotiations between NOCAL, the Canadian Overseas Petroleum LTD (COPL) and ExxonMobil regarding Liberia's offshore Block 13 (LB-13).
In May 2011, Peppercoast announced the proposed sale to Canadian Overseas Petroleum Limited of it 100% interest in the Production Sharing Contract for LB-13.
However, addressing journalists, Dr. McClain explained that as a frontier country, Liberia will receive an upfront payment through a signature bonus, taxes and fees of US$50,000,000.00. According to him, this contract is amongst the first in the world to include the provisions where citizens could receive dividends from production if the exploration in the LB-13 leads to successful discovery and production of oil.
"Beginning with the various provisions of the contract, the US$50 million to be received immediately upon the ratification and printing into handbills includes US$21.25 million, one of the highest Liberia oil block signature bonus yet. This amount of US$21.25 million is also the highest upfront payouts to a non-producing country in the world. Up until now, it may interest you to know that the largest signature bonus Liberia has received for a single offshore block is US$3.33 million. The rest of the US$50 million is paid for taxes and transfer fees," NOCAL President, CEO said.
He also disclosed that the negotiating team of the government has also secured a 5% Citizens Participation Share in LB-13. Also in the contract, Dr. McClain said NOCAL secured a 10% royalty on oil produced from wells drilled under water depths of 0--1500 meters, and additional 5% royalty was agreed for oil produced from wells drilled under water more than 1502+meters of depth.
He noted that prior to this, there was no royalty under the Production Sharing Contract (PSC) of LB-13.