Media Workshop
July 30, 2012

Background of Liberia Oil and gas
development program

Reform Process

Draft Policy Paper
Background to Sector
1940s
First
petroleum
exploration
awarded to
Mr.
Jake
Simmons
1960s1972
Chevron, Union
Carbide, Reeds
and Bets and
Crystal Oil
drilled four
wells but did
not engage in
production of
oil as no
discoveries were
declared.
1980s
AMOCO Liberia
Exploration
Company signed
two successive
petroleum
exploration
agreements and
drilled three
offshore wells but
oil deposit was
discovered
2011
First Major
Oil
discovery
in Liberia
by African
Petroleum
Liberia is not producing oil yet. Oil
was only discovered for the first time
in Feb 2012
We do not know yet if that discovery is
in commercial quantities – enough to
produce. It must be analyzed first
If after analysis later this year it is
proved to be commercial, production
could start in 5 to 7 years




Oil is a finite resource – it is difficult to extract and it
runs out eventually
Oil can generate huge revenues, but it also carries
risks. It can increase corruption, inequality, damage
the environment and even cause war
To benefit a country, it must be managed well. It
must be produced and regulated properly, and
revenues must be spent transparently on
development
That requires the right policies, laws and capacity.
That is why the Government is reforming the whole
sector, starting with a new petroleum policy
History of Reform
December
2011
President
Sirleaf
requested
the Chair of
the HTC
(NOCAL) to
immediately
proceed with
the reform
process
January
2012
PAG and
HTC
convened a
round table
discussion
with
different
stakeholder
s to
officially
commence
the reform
April 2012
NOCAL
organized
retreat for
HTC, PAG and
civil society
organizations
in Buchanan to
develop
underlying
principles for
the draft policy
June 2012
HTC
principals
agreed on the
underlying
principles
and
authorized
the drafting
committee to
develop the
first draft
policy paper
August
2012
Nationwide
Consultation
Conducted
by HTC
subcommitt
ee and other
key
stakeholder
s to
generate
comments
from public
A cross-governmental task force is managing the
process:
Hydrocarbon Technical Committee
NOCAL (Chair)
Ministry of Finance and Planning
Ministry of Lands, Mines and Energy
Ministry of Labour
National Investment Commission
Office of the Legal Advisor to the President
Environmental Protection Agency
HTC Principals review
proposals of Subcommittee, and make
final decisions on
policies
Technical Sub-Committee
Sub-committee does
main work of
deliberating and
generating policy
Policy and Law Drafting Team
Drafting Committee
does detailed drafting
Policy Advisory Group
External PAG advises
and supports
Representatives from same bodies as HTC
Civil Society Goups (LEITI, LOGI, LipWatch)
Drawn from subcommittee
(Law Reform Comm. (Chair), NOCAL, MOJ, OLA, MLME)
(Norad, Revenue Watch Institute, ACET)
Outcomes of the Reform
Development of Petroleum Policy
Paper
Revision of the New Petroleum Law
2002
Revision of the Act Establishing
NOCAL
Establishing Model Production Sharing
Contract (PSC)
Development of a Revenue
Management Act
Deadline:
Sep 2012
Deadline:
December
2012
Deadline:
December
2012
Deadline:
March 2013
Deadline:
TBC
Consultation Strategy
Divide stakeholders into two broad categories:
1. Public
Local Communities and
publics across Liberia and
in the Diaspora
2. Special Interest
Groups
• Associations/Academia
• CSOs/Nos
• Youths/students
• IOCs and Businesses
• Legislature and caucuses
Two categories of events to match the stakeholder types
1. Town Hall Meeting
(TH)
- Approx 150 people
- Short introduction
- Facilitated open discussion
2. Roundtables (RT)
- Approx 30 people
- Closed door session
- Detailed discussion
Consultation Strategy
Team
1
Counties
1. Nimba
2. Lofa
Team
4
Counties
1. Margibi
2. Bong
Team
2
Counties
1. Grand Bassa
2. Rivercess
3. Sinoe
Team
5
Counties
1. Bomi
2. Cape Mount
3. Gbarpolu
Team
3
Counties
1. Grand Gedeh
2. Grand Kru
3. Maryland
4. River Gee
Team
6
County
1. Montserrado
9 thematic areas
1.
2.
3.
4.
5.
6.
7.
8.
9.
Resource Ownership and Maritime Boundary
Legal Framework and Institutional Oversight
State Participation and Fiscal Regime
Revenue Management & State – NOC Financial and
Tax Arrangements
Transparency and Accountability
Safety, Health and Environment
Licensing and Contracting
Work Program and Operations
Local Content
Policy Goal
“To manage Liberia's petroleum sector in a way that
ensures that petroleum resources equitably benefit
the people of Liberia now and in the future.”
A.
B.
C.
D.
E.
Oil shall be used for the maximum benefit of all Liberians
The Constitution says that mineral resources under the
ground or sea shall be owned by the State, not by
individuals. Land owners shall be compensated
The oil sector shall be sustainably managed and seek the
maximum Liberian participation
The policy recognizes territorial boundaries, and seeks to
amicably resolve any maritime boundary disputes
It shall not exploit a resource on a boundary without an
amicable agreement and unitization plan
A.
B.
C.
D.
E.
The sector shall adhere to international leading practice and
separate 3 key institutional roles to avoid conflicts of
interest
NOCAL shall manage the commercial interests of the State
and state equity
The relevant Ministry (MLME) shall manage policy-making
and forming regulations
Regulation shall be managed by a new Independent
Regulator. This regulator shall be formed over the coming
years, and begin at the start of substantial commercial
production of oil
Until then, NOCAL shall act as regulator along with other
regulatory bodies (eg EPA, LMA)
A.
B.
C.
D.
E.
The fiscal regime shall create incentives for responsible
investors while providing a fair and equitable return to
Liberia
The fiscal regime shall include ‘progressive’ elements, so
that returns to the country increase with overall returns
The overall fiscal regime shall be a coherent whole,
balancing different revenue streams and using a range of
fiscal tools
The fiscal regime shall be transparent and predictable, and
available to the public
The State shall participate in the sector through carried
interest
A.
B.
C.
D.
E.
The Goal of revenue management is to use oil revenues for the
benefit of ALL Liberians regardless of region or background
The government shall put in place mechanisms to facilitate
efficient collection of revenues and auditing
Revenues shall be put in designated accounts for
intergenerational equity, future investment, and stabilizing oil
price fluctuations
NOCAL shall eventually be funded through its state equity
share. Until that share is actualized, the Government shall
ensure it has sufficient budget allocations
Revenue Management systems shall strike the balance between
investment in development needs like education and
infrastructure, and saving for the future.
A.
The Government shall operate with complete transparency and
accountability in the sector
B.
The sector shall adhere to the principles of LEITI and regularly
publish information about revenues
C.
The Government shall encourage active engagement of civil
society organizations in monitoring and reporting
D.
The legal framework shall establish the right for citizens to seek
legal redress in the judicial system
E.
The Government shall commission annual audits of petroleum
activities by qualified auditing companies awarded by bids
F.
Government shall adhere to recognized principles of gender
balance and equality
G.
All public officials and civil servants within the petroleum sector
shall undergo periodic checks for mismanagement.
A.
F.
A.
B.
C.
All petroleum operations will require an Environmental and
Social Impact Assessment, including a spill contingency plan and
an Emergency Preparedness Response Plan
At the end of a petroleum activity, the environment shall, to the
extent possible, be brought back to its original state
It promote using best practices for prevention and rapid
emergency response mechanisms designed to mitigate air and
water pollution
The Government shall review and update waste disposal
standards including inspection, monitoring, evaluation and
control mechanisms
The holders of a license, its parent, subsidiaries, and contractors
shall be strictly, jointly and severally liable for pollution, harm to
the environment, property or injury to persons resulting from
their operations
A.
B.
C.
D.
E.
The Government shall adopt a hybrid form of Petroleum
Sharing Contract
The Government shall adopt the principles of competitive
bidding, pre-qualification, and publish the bid criteria
In the case of a reservoir spanning more than one block,
unitization shall be applied
The government shall set criteria for transfer of license or
operatorship including due diligence and payment of
transfer fees. Any transfer shall be subject to Government
approval
The assets of each license shall be managed independently
or “ring fenced”
A.
The exploration program shall be divided into 3 phases:
i. First exploration period for 3 years
ii. Second exploration period for 2 years
iii. Third exploration period for 2 years
B.
Government shall establish effective systems for monitoring
and auditing petroleum operations
C.
Work plans shall be subject to Government approval
D.
Companies must relinquish non-commercially viable areas
to the Government
E.
All data shall belong to the State
F.
All petroleum companies shall be expected to optimize
production
G.
Spare capacity in infrastructure shall be made available to
other users

A.
B.
C.
D.
The value created in the Liberian economy by systematic
development of capacity and capabilities through the utilization of
indigenous Liberian human and material resources, and services.”
A Liberian-owned company is defined as: “a company or any
business venture where a minimum of 25% of its shares is
owned by Liberians.”
The Government shall create a local content strategy to protect
Liberian business interests and develop Liberians to achieve
maximum benefits from petroleum resources
The Government shall prioritize local and International Oil and
Services Companies with proven track records of support for
local content during the bidding process
Liberian goods and services shall be used in the conduct of
petroleum activities to the extent feasible
Government will enact laws, policies and regulations for
inclusion in contracts and other legal instruments that will
commit international oil companies to:
A.
i.
Prioritize employment of qualified and competent Liberian
citizens in the oil and gas and other associate industries;
ii.
Train Liberians in relevant fields relating to the oil and gas
sector;
iii. Contribute to institutions involved in the training of Liberian
citizens to enable them to be eligible and meet the
requirements for positions in the oil industry
iv.
B.
Contribute to community development programs through
joint ventures to transfer technology.
The Government shall utilize oil revenue to support, develop
and expand public and private entities in order to strengthen
their capacity in service delivery.
Thank You!!!
Questions, Discussion, Input