The Liberia Petroleum Regulatory Authority (LPRA) has issued a detailed clarification on Liberia's petroleum licensing framework following growing questions from oil companies and stakeholders regarding the allocation of responsibility for upstream petroleum operations and the implementation of the Petroleum (Exploration and Production) Act.
In a statement released Tuesday, the LPRA reaffirmed that it remains the legally mandated authority responsible for administering Liberia's petroleum sector, negotiating petroleum agreements, and granting petroleum rights under the Petroleum (Exploration and Production) Act of 2014, as amended.
According to the Authority, Section 4.1 of the Petroleum Act clearly states that "the right to explore for, produce and transport petroleum shall be acquired and held only in accordance with a petroleum right granted under this Act and applicable regulations."
The LPRA further cited Section 7.2 of the law, which establishes the Authority "for the purpose of administering this Act," while Section 8.1(c) authorizes the LPRA to "enter into petroleum agreements and such other instruments as may be necessary or appropriate to evidence other petroleum rights granted under this Act."
Keep up with the latest headlines on WhatsApp | LinkedIn
The Authority stressed that under the law, reconnaissance licenses may only be issued to entities that satisfy the requirements outlined in Section 11 of the Petroleum Act.
At the same time, LPRA clarified that holding a reconnaissance license does not automatically entitle a company to a petroleum agreement.
The statement further emphasized that any petroleum agreement issued in Liberia must be signed jointly by the Director General of the LPRA and Liberia's Minister of Finance and Development Planning.
Addressing concerns surrounding the 2019 amendment to the Petroleum Act, the LPRA explained that Section 14.1(c) expanded the mechanisms through which petroleum agreements may be awarded, including through competitive bidding, direct negotiation, and executive allocation of petroleum blocks to the National Oil Company of Liberia (NOCAL).
According to the Authority, the provision specifically allows "the allocation of a 100% interest in a block to NOCAL through executive allocation."
The LPRA noted that several oil companies have recently sought clarification regarding how this executive allocation provision should be interpreted and applied under Liberian law.
However, the Authority maintained that the 2019 amendment did not alter LPRA's core statutory responsibilities under Sections 4.1, 7.2, and 8.1(c) of the Petroleum Act.
"Section 14.1(c) did not change the responsibilities of the LPRA under sections 4.1, 7.2 or 8.1(c) of the Petroleum Act for the negotiation and approval of reconnaissance licenses and petroleum agreements," the statement noted.
The Authority further explained that Section 14.1(c) itself recognizes LPRA as the institution that "shall grant petroleum rights to NOCAL."
"As such, the LPRA continues to be the entity responsible for granting petroleum rights to NOCAL in the form of reconnaissance licenses and petroleum agreements," the statement added.
The Authority clarified that the executive allocation provision merely permits NOCAL to partner with prequalified investors and enter negotiations with LPRA for petroleum agreements covering blocks allocated to NOCAL by the President of Liberia.
Under the framework, LPRA said it remains responsible for conducting and supervising negotiations in coordination with the Ministry of Finance and Development Planning to ensure Liberia's national interests are protected.
"LPRA remains responsible for conducting such negotiations, with the approval of the Minister of Finance and Development Planning, in a manner that secures the interests of the State," the statement stressed.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
The Authority also cautioned that Liberia's economic interests in petroleum agreements cannot be constrained by arrangements outside the legal procedures established under the Petroleum Act.
"The State's economic interest in a petroleum agreement may not be limited by terms that are not negotiated and approved in accordance with the process required by the Petroleum Act," LPRA emphasized.
The clarification comes amid heightened international interest in Liberia's offshore petroleum sector following the country's recent licensing initiatives and ongoing efforts to attract investment into frontier oil exploration.
The LPRA described itself as Liberia's independent regulatory institution responsible for overseeing petroleum exploration, development, and production activities in the country.
The Authority noted that it leads petroleum agreement negotiations on behalf of the Government of Liberia in collaboration with the Ministry of Finance and Development Planning and the Ministry of Justice.
