27 April 2014

Liberia: Report - NOCAL Poised to Sell Four Oil Blocks As Budget Shortfall Bites

Credible report obtained by the Heritage from the corridors of the Capitol Building says the Legislature has supposedly given the National Oil company of Liberia (NOCAL) the green light to sell four oil blocks to a Chinese company under the pretext of "re-assigning" them.

The Capitol Building is the seat of Legislature, while the National Oil Company of Liberia is regarded as the independent state owned enterprise created by the NOCAL Act of 2000 and mandated to coordinate the development of Liberia's oil sector.

Currently, the Government and NOCAL are coordinating a vigorous oil governance reform program in line with best practice.

While these reforms are taking place, the laws prohibit for any oil block to be sold by NOCAL. When the four oil blocks are sold, some observers say, it will underpin the ongoing oil reforms process.

Oil block (s) will only be sold following the passage of the reform laws by the Legislature. Before the commencement of the ongoing reforms of the oil laws, NOCAL sold oil block 13 to Exxon Mobil(XOM) and Canadian Oversea Petroleum. Block 13 transformed from Pepper coast Petroleum formerly known as Broadway Consolidated Ltd.

Among other things, the renegotiated contract yielded US$50 million upfront to Liberia through a combination of taxes and transfer fees. Liberia has not yet made a commercial discovery of oil, but in February 2012 African Petroleum (API) announced a significant discovery in LBO9.

According to our report gathered from well- placed Capitol Building sources, the four oil blocks the Legislature, which is considered as the First Branch of Government, has allegedly given NOCAL the green light to sell are: 6, 7, 16 and 17.

Our sources, speaking on condition of anonymity, divulged that the Legislature gave the green light to NOCAL based on account that the Government of Liberia (GoL) had pleaded that it is in desperate need of money owing to the budget shortfall.

Reports say most of the government sponsored projects are currently at a standstill due to the budget shortfall.

Accordingly, our sources further divulged that NOCAL has formulated an idea that the four oil blocks in question will be "re-assigned" instead of saying it will be sold.

A strategy, our sources averred, the lawmakers are said to have embraced. "This idea designed by the oil company is intended to give the public the impression that the four oil blocks will not be sold, but will be reassigned. By saying so, it will make the public not to go against NOCAL when the issue surfaces in the public via the media," our sources further averred.

Quizzed about the expected value of the four oil blocks when sold, our sources asserted that it could be around US$200 million since block 13(single block) was sold for US$50 million.

When further quizzed as to when the deal will be consummated, our sources added: "Very soon because NOCAL has already been given the green light to carry out the transaction."

At the same time, the Heritage learnt late Sunday evening that NOCAL is poised to consummate the deal today, Monday, April 29.

But when asked to comment on the information obtained by the Heritage, NOCAL's Vice President for Public Affairs, Lamini Waritay, said the only information he is aware of regarding Blocks 6 & 7, is that whatever negotiations that had been going on between Hong Kong TongTai Petroleum International and NOCAL had been terminated since August 2013.

As to whether these same blocks and those of block 16 & 17 are now being "re-assigned" to another Chinese company, according to Heritage's information, he said he is not aware of that.

For his part, the Deputy Speaker of the House of Representatives, Hans Barchue, when contacted by the Heritage, said he is not aware of the information obtained by the paper.

Lawmaker Barchue, who is currently serving as Acting Speaker, maintained that he is not aware of such information.

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