- Written by Our Senior Staff
- Category: Headlines
- Published: 22 April 2012
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“NOCAL observes that many of the statements and recommendations of the report are redundant or outdated”
It appears that the National Oil Company of Liberia (NOCAL), while exerting efforts to exhibit transparency and openness in the emerging energy sector, it is taken aback to some extent by the pitch at which the National Legislature is portraying the activities of the Oil Company to the public.
The company, having meticulously read the summary of actions taken by the House of Representatives on the reform of the Oil and Gas Sector of the Liberian Economy, said many of the oil contracts were ratified by the 52nd National Legislature.
NOCAL has indicated that though it respects the decision of the Legislature, it is saddened to note that contracts that were ratified by the 52nd National Legislature should be placed under a stay order by the 53rd National Legislature.
The oil company said nullifying existing contracts already ratified is a sharp contradiction and condemnation of the work of the 52nd National Legislature.
“NOCAL welcomes the renewed engagement of the Legislature in the evolving governance of Liberia’s oil sector. The constructive engagement and cooperation of all parties and stakeholders is essential to the successful reform and management of Liberia’s potential hydro-carbon sector,” a NOCAL release issued on April 20th noted.
The company indicated that the Legislature called for reforms to the laws governing the sector when on 26 February 2012 it (NOCAL) publicly set out precisely such reform process on behalf of the Executive, which described a clear and inclusive program of reform, starting in 2012 with the formulation of a new Petroleum Policy, followed by establishing a new Petroleum Law.
This was followed by the creation of a new Model Production Sharing Contract (PSC). “This program is a cross-governmental effort and will include public and civic society consultation. The first stage of this process took place in early April, to start to draft a new policy,” the release noted.
Commenting on negotiations which the Legislature called for a moratorium on the issuing of oil contracts for Blocks 1-7, NOCAL observes that a third bidding round to award contracts for Blocks 1-5, was cancelled by the company in 2011.
“No contracts have been awarded, and therefore a moratorium has effectively been in place since last year. Contracts for Blocks 6 and 7 were negotiated but never fully executed or submitted to the Legislature, and are currently under review by the government. These details have been publicly issued by NOCAL when it provided an update on the status of all oil blocks on March 15, 2012,” the company clarified.
Accordingly, for Blocks 6-7 where unsatisfactory past processes have not yet been resolved, active review is said to be underway to find a resolution which prioritizes above all else the future potential value generated for the country.
Clarifying on the controversial Block 13, NOCAL noted that the oil block has been under contract to Peppercoast Petroleum Ltd (formerly named Broadway Consolidated PLC.). NOCAL indicated that the contract was signed in 2005, amended in 2007, and ratified by the Legislature in 2007. To date, the company clarified that no well has been drilled.
NOCAL said in 2011, Peppercoast proposed a 100% transfer to Canadian Overseas Petroleum Ltd (“COPL”) but NOCAL withheld consent. Furthermore, Peppercoast has reportedly proposed an alternative transaction, with Exxon-Mobil acquiring 70% and COPL 30% of the Peppercoast Block 13 contract, and with Exxon-Mobil having primary operational and financial responsibility for the entire contract.
Regarding the US$27 million reportedly earmarked in the national budget, NOCAL said no royalties or revenues can accrue from an agreement that has not been signed.
Moreover, NOCAL has noted that the issues of local content and revenue management highlighted by the National Legislature were both addressed in the company’s 26 February statement, stating clearly that the new Petroleum Policy will set out the principles guiding all aspects of the upstream and midstream oil sector, including revenue and local content, which is very important in developing a middle class. “Once a new Petroleum Policy has been validated and finalized, a new Petroleum Law will reflect its principles law,” the release said.
At the same time, NOCAL has clarified that regarding the variation between the content of Liberia’s existing PSC contracts and the articles of the Petroleum Law of 2003, all existing active PSCs were submitted to and ratified by the Legislature over the last eight years, thereby indicating that the legislature also approved the violation it raises.
It can be recalled that on 13 February 2012, Margibi County Representative, J. Emmanuel Nuquay communicated to Plenary raising a number of issues concerning the energy sector, claiming that NOCAL has failed to execute the mandate of the Legislature by not completing negotiations of Block 13 thereby creating budgetary deficit in breach of the national budget law, among others.
The communication prompted the Legislature to take decision by calling for a halt to all existing contracts already negotiated and Ratified by the 52nd National Legislature, until new negotiations and ratifications are made by the 53rd Legislature.