Liberia: Chevron Moving Ahead With Off-Shore Oil Search

President Sirleaf meets a staff of Anadarko Petroleum Corporation during a tour of the exploration rig.
22 June 2011

Monrovia — U.S.-based Chevron, which announced in March plans to explore for petroleum in Liberia, is starting deep-water drilling that could move Liberia into the ranks of west Africa's oil producing nations.

Chevron's investment in exploration is among many large injections of capital coming into the country and helping to rebuild an economy that was shattered during 25 years of conflict and civil war.

The possibility that oil deposits may exist was first raised by the Anadarko Petroleum Corporation, headquartered in Texas in the United States, which found oil off Sierra Leone in 2009. Now another American firm, Chevron – one of the world's largest energy companies – has joined those attracted to Liberia.

"If we are successful, we are looking at investments of billions of dollars," according to Karl Cottrell, the Liberia country manager for Chevron.

Liberia's coastline is on the oil-rich Gulf of Guinea. Although both of Liberia's neighbors – Sierra Leone and Cote d'Ivoire – have found offshore oil reserves, Liberian waters have yet to yield productive oil fields.

Although Cottrell spelled out the benefits that could accrue to Liberia if oil was found, he cautioned that the country is not yet at that point. "Between now and when we can foreseeably see oil production on any exploration success, is roughly eight to 10 years," he said in an interview with AllAfrica in the company's Monrovia office.

He said the exploration phase, which is expected to last three years, involves gathering data to try to locate oil and determine whether it has sufficient commercial value to justify the large-scale investment required.

The company signed a deal to explore three deep-water blocks covering a combined area of 3,700 square miles. Chevron will hold a 70 percent interest in the concessions. Cottrell said the company has identified its first well location: "That allows us to do the detailed design on how we actually drill that well."

Already the Liberian media have started to talk up the potential benefits to the country, and to ask whether they will be a blessing or a curse. And for many ordinary people, the discovery of commercially viable deposits is a foregone conclusion: they believe they're there and that corrupt officials have already started to feed off the proceeds.

This is Liberia's first offshore exploration in 25 years. Between 1971 and 1985 the country drilled seven wells, many of which were dry. Cottrell said data analysed so far indicates that Chevron has a 25 to 30 percent probability of success. That has been enough to encourage the company to make its initial investment.

"Having said that, 75 percent of the time we are still going to be unsuccessful," Cottrell said. Even in an area with potential, he said, the chances of success are never more than 50 percent.

The company recently initiated a five-year, U.S.$10.5 million corporate social responsibility investment in Liberia's socio-economic development, which it says is to support the country's Poverty Reduction Strategy. Whether or not Chevron finds viable oil deposits, Cottrell said, "We want to leave some sort of legacy…. in that we have built education up. We have helped in the area of health. And we have developed some enterprises."

Liberia's largest referral hospital, the John F. Kennedy Memorial Hospital, other health centers and the University of Liberia are some of the institutions that have benefited from the investment so far. "We are funding part of the under-five ward and also have put forward a generator for the psychiatric ward [at JFK]," he said.

In March, the company said it had earmarked daily spending of $1 million when a full drilling operation begins. At a ceremony marking the opening of Chevron's office complex in Monrovia, Joseph Boakai, the country's vice president, said that "Chevron represents an expression of confidence in Liberian society, which is an essential condition for attracting other major investors in all sectors of our economy."

The company, with others operating oil exploration blocks along Liberia's coast, has been working to manage public expectations. At a two-day workshop to explain oil exploration and drilling to journalists, Cottrell faced the daunting task of educating a number who seemed fixated in the belief that there are commercially exploitable oil reserves.

In a two-hour presentation, the country manager explained that oil exploration and drilling was a risky business which isn't always successful. "But why are you here then?" a few of the journalists asked skeptically.

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