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Negotiating Oil Concessions Outside of Open And Competitive Bidding Will Deny Liberians The Best They Could Get From Oil resource

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By Author: Ambulah Abutumaga Mamey

President George Weah has announced – through the Liberia Petroleum Regulatory Authority- a dangerous decision to begin negotiating Petroleum Sharing Contracts (PCs) with International Oil Companies outside of any open, fair, and transparent competitive bidding; but through Direct Negotiations. The President’s latest decision has removed ALL initial doubts that he has a desperate agenda to rob Liberians of their oil wealth and secure same for he, his allies within the Legislature, and outside the government.

When oil companies seek petroleum operation license, it is open competitive bidding process that gives them confidence to compete and challenges them to offer their best set of financial, social welfare, environmental, and technical packages to host countries. The Direct Negotiation method that President Weah now prefers and pursues has proven to be noncompetitive, non-transparent and always executed behind closed doors and under dubious circumstances that leave those participating in the negotiation with more benefit than the country and its people.

In 2009, it was through direct negotiation that Liberia lost approximately 245 million to Oranto Petroleum– a Nigerian-owned oil company. Oranto acquired three blocks (block 11, 12 and 14) from Liberia for a total of approximately five-hundred thousand USD, and a year later in 2010 sold 70% interest in those blocks to Chevron for 250 million; earning 245 million more than what Liberia received in 2009. On the other hand, through open competitive bidding in 2013, Liberia- earned an unprecedent 50 million in upfront payments from the award of just one block (block-13) to ExxonMobil. While, there remains concerns over that management of  money generated from the oil sector, it is settled that competitive bidding- not direct negotiation- remains the best and most secure pathway for Liberia to attract qualified companies to its basin and generate the maximum financial and other benefits from its hydrocarbon sector.    

The negative experience Liberia had with direct negotiation, especially the loss of over 200 million, and the urge to avoid future reoccurrence was a major factor that led the country and its international partners-including the United State Government- to reform Liberia’s oil sector in 2014. The 2014 reform included the adoption of a 2014 Petroleum Law which explicitly said in section 14: “petroleum agreement may be awarded ONLY on the basis of an INTERNATIONAL COMPETITIVE BIDDING PROCESS”. Sadly in 2019, President Weah and 54th Legislature secretly amended the 2014 Petroleum Law and included – among other detrimental changes- direct negotiation as an option to award petroleum operation license. Section 14 b (i) of the 2019 amendment also empowers the President to unilaterally decide when to use direct negotiation for the award of petroleum license.

The 2019 amendment and the president’s latest decision to abandon competitive bidding- if not urgently corrected- will reverse all the gains Liberia has made to increase transparency and prevent or reduce chances of bribery in the award of petroleum operation license. The actions will also prevent Liberia from attracting credible and experienced operators to its basin and substantially reduce what they country should benefit from its hydrocarbon resource.

CORLE therefore calls on President Weah to cancel ongoing direct negotiations, undo the 2019 amendment, and relaunch an international competitive bid process in ways that assure experienced operators that the bid process will be transparent/fair, and that their participation will not cost them any future reputational damage.

As CORLE did during the just ended Liberia 2020 License Round which experienced the premature exit of bidders and the subsequent failure of the License Round to consummate agreement with any company, CORLE will remain engaged strategically with key natural resource watchdog organizations, Liberia’s development partners and interested oil companies to expose the personal wealth accumulation agenda of President Weah and his allies that they desperately seek to achieve through the manipulations of laws governing the oil sector. By such action, CORLE will be seeking to ensure the recently announced direct negotiation is abandoned so that Liberia’s petroleum operation licenses are awarded to experienced, financially and technically qualified operators only after competitive bidding. The goal of CORLE’s action is to increase Liberia’s chances of drilling more wells, making commercial discovery, and protecting the rights and interest of ALL Liberians in future oil wealth.

About The Author: Ambulah Abutumaga Mamey – Organizing Chairman, CORLE / Liberia Youth Initiative for Peace and Sustainable Development


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