The National Oil Company of Liberia (NOCAL) says it welcomes the recent comments provided by Global Witness on the current bid round. The company said solicitation of feedback on the Production Sharing Contract from many stakeholders is a standard practice for a bid round.
However, NOCAL indicated that the Global Witness comments are being carefully considered by the Government, along with all other stakeholder feedback.
In a release, the oil company explained that this bid round is being conducted in a carefully planned, diligent and professional way to the highest international standards. It has participation of one of the world's top international consulting firms, EY (formerly known as Ernst and Young). NOCAL said EY will receive, open and assess the bids and are providing independent oversight to the process. This process, according to the company, guarantees legitimacy and transparency.
The company disclosed that the planning phase also included detailed advice from external experts on geologic data, petroleum geology, commercial transactions, fiscal modeling; petroleum law and economics; as well as advice on legal issues and good governance of natural resources.
“The planning also included significant legal and governance support from independent advisors with considerable industry experience, and extensive discussions with key development partners, including the US Economic Capacity Governance Initiative and IMF. The fiscal terms were developed with assistance of external advisors and approved by Hydrocarbon Technical Committee to ensure Liberia gets the best deal possible,” Nocal stated.
NOCAL claimed that these provisions meet standards that match and even outdo quality bid rounds anywhere in the world, demonstrating the Government’s commitment to transparency.
It said the bid round was conceived to ensure that vacated acreage not lie ‘fallow’ when it could be explored to advance the development of Liberia’s oil sector. The blocks being offered for investment are old acreage and do not fall under the 2012 moratorium on acreage.
NOCAL: “The bid round was planned and executed with appropriate time and care, and conception and planning pre-dated the Ebola crisis. However, Ebola has now made the success of the bid round even more important. The long-term future of Liberia cannot be forgotten while dealing with a short-term crisis. The revenue generated will help plug the serious economic damage wrought by the scourge of Ebola in the short term.”
In the long term, the company added that the careful design and terms of the contracts will ensure economic benefits to Liberia, noting that “there is no chance that the ability of the Government to negotiate effectively on behalf of the country has been reduced because of the crisis. NOCAL has had constant positive feedback from the industry about how well organized this round is.
Expounding further it said ‘Local Content Participation’ provision designed into the investment round will also help create Liberian jobs and lead to meaningful Liberian participation in the upstream and downstream petroleum business.
NOCAL: “ In a world first, bids from groups that include either a significant West African/ECOWAS upstream petroleum company that has committed to partner with a Liberian company, or a direct partnership with a Liberian company for a total of a 5% interest in the PSC by the Liberian company, will have their bids evaluated with a 20% uplift in their signature bonus proposal. This will encourage local partnerships and local content.”
The narrated that in addition to the NOCAL participation of 10% and Citizen Participation of 5% for a total Liberian participation of 20%, it is also in addition to the other financial benefits, such as royalty, tax, and production sharing which are all spelled out in the model Production Sharing Contract.
NOCAL said it will continue to work with all stakeholders to make this process successful for the country, adding that this bid round has the potential to generate major long-term benefits for Liberia.