The NEWS (Monrovia)

11 March 2013

Liberia: Ellen Signs Agreement

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

The Liberian government is breathing an air of relief if an agreement between it and the world's largest oil company, Exxon Mobil, is ratified by the National Legislature.

Announcing details of the agreement during its signing ceremony over the week-end, President Ellen Johnson Sirleaf told reporters, among other things, that the deal will give the government an immediate cash flow of at least USD45 million as signature fee, while the University of Liberia will receive an annual contribution of USD150, 000.

She said the giant American Oil company is to own eighty (80) percent of the shares, while the Canadian Oversea Petroleum Limited (COPL), will own twenty (20) percent.

Although the President did not say what would happen to the Liberian share, however, the President and CEO of the National Oil Company of Liberia (NOCAL), Dr. Randolph McClain, explained last week that the negotiating team of the Liberian government secured a 5% citizens participation share in LB-13.

Additionally, he said the negotiating team also secured a 10% royalty on oil produced from wells drilled under water depths of 0--1500 meters. Besides, another 5% royalty was agreed from oil produced from wells drilled under water more than 1501+meters depth.

According to Dr. McClain, prior to the recent negotiation, there was no royalty under the Production Sharing Contract (PSC) for Block 13.

However, speaking to reporters at the weekend, the Liberian leader said the agreement, upon her signature, and when ratified by the Honorable Legislature and printed into handbills, will transfer operational rights of oil block LB-13 from Peppercoast to ExxonMobil and the Canadian Overseas Petroleum Ltd (COPL), with ExxonMobil owning 80 percent and COPL owning 20 percent of the operational rights.

"We have consistently laid out the framework and principles by which we would act to protect the interests of our people and to promote opportunities for further investments in the country. These principles include fairness to the investor and more benefits to our people; increased transparency, accountability and Liberian participation; increased opportunities and assurances for building the capacities of our people; adherence to the best available measures for the protection of our environment; and the leveraging of oil revenues to ensure that long after the oil is depleted, our economy will be more diversified and stronger. And, importantly, the lives of our people will be improved," the president stressed.

Exxon Mobil is a United States corporation with over USD400 Billion in assets, thus making it the largest oil company on the face of the globe. It is a merger of two companies, Exxon and Mobil Oil, both American companies. On the other hand, COPL is a relatively small Canadian company that invests in oil ventures overseas.

Bock #13 has been an object of debate over the last several years, with claims and counter-claims between the Executive and Legislative branches of government. Located between Block #12 and #14(owned by Chevron Oil Company), this oil block was originally owned by Broadway, UK based company in which some Liberians owned shares.

The payment of US$50 million comes at a time when the government budget is experiencing very difficult stress as a result of declining revenues.

A credible source with significant contacts with knowledge and responsibility for government revenues and expenditure told our reporter on condition of anonymity that the situation is "getting bad", and that if nothing major does not happen in terms of improving the revenue flow, the government is likely to face a massive shortfall.

Asked as to why revenues were not performing, the senior official said that most of the revenues in the budget were based on concessions agreement that had not been finalized; and that these agreements or companies are forthcoming.

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InFocus

Liberia Signs Multi-Million Dollar Oil Deal

Aboard an oil rig.

President Ellen Johnson Sirleaf has signed a multi-million dollar oil deal with one of the world's largest energy companies, Exxon Mobil. Read more »