11 March 2013

Liberia: Ellen Okays U.S.$50 Million Oil Deal

Photo: James M. Garresen, II/Executive Mansion
Aboard an oil rig.

A day after authorities at the National Oil Company of Liberia or NOCAL announced that they have completed a deal with the Canadian Overseas Petroleum Ltd. (COPL) and ExxonMobil for the controversial offshore oil Block-13, President Ellen Johnson-Sirleaf has signed the contract saying, it is better than previous ones.

"The participation of the world's largest oil and gas company, ExxonMobil, and other considerations have persuaded me that, truly, this renegotiated agreement is different from, and better than, the previous," President Sirleaf said Friday.

" ... I am satisfied that in many, if not all, of the provisions of this agreement ," she said adding "In notable respects, a number of the provisions in this renegotiated agreement stand out as amongst the first in Liberia."

The contract comes with a US50 million signature fee, a money badly needed by the government as revenue collection declines amidst hanging projects.

NOCAL President Dr. Randolph McClain told a jammed packed press conference at the Ministry of Information Thursday that the US50 million will be received immediately upon ratification and printing into handbills.

This he said includes US21.5 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 US3.33 million. He added that the rest of the US50 million is paid for taxes and transfer fees.

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.

President Sirleaf during the signing ceremony on Friday agreed with the NOCAL president insisting that the COPL-ExxonMobil deal offers one of the best.

The contract has other benefits such as equity participation for citizens; royalties, carry-free interests for the State and linkages to local businesses. The agreement includes funds for training, social welfare and education.

There are also provisions to ensure a rigorous protection of our environment and the establishment of a special "Abandonment Fund" for each field placed into production once 50 percent of the estimated recoverable petroleum has been produced from such field.

President Sirleaf has ordered that the deal be forwarded to the National Legislature for ratification. With the looming controversy over the oil sector it is yet to be seen whether the deal will sail through so easily.

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