The LPRA has received questions about the allocation of responsibility for upstream petroleum operations in Liberia and hereby provides the following information.
The Fundamental Requirements of the Petroleum (Exploration and Production) Act, 2014
Under section 4.1 of the Petroleum (Exploration and Production) Act, 2014, as amended (the “Petroleum Act”), “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. Section 7.2 of the Act states that the LPRA “is established for the purpose of administering this Act. And section 8.1(c) of the Act further states that it is the function of 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.”
Further, the Petroleum Act provides that LPRA may issue a reconnaissance license only to persons meeting the requirements set forth in section 11 of the Petroleum Law, that a holder of a reconnaissance license shall not by virtue of the issue of a license have the right to be awarded a petroleum agreement, and that a petroleum agreement may be issued only if signed by both the Director General of the LPRA and the Minister of Finance and Development Planning.
Questions in Relation to the Petroleum Act 2019 Amendment
The 2019 amendment to the Act created section 14.1(c), which expanded the manner in which a petroleum agreement may be awarded to include competitive bidding, direct negotiation (as was done in the Liberia 2024 licensing round) and “the allocation of a 100% interest in a block to NOCAL through executive allocation”. Several oil companies have raised questions with the LPRA about the application of the executive allocation provision of section 14.1(c)
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. And in section 14.1(c) it recognized that it is the Authority which “shall grant petroleum rights to NOCAL.” Thus, the LPRA continues to be the entity responsible for granting petroleum rights to NOCAL in the form of reconnaissance licenses and petroleum agreements.
What Article 14.1(c) does do is permit NOCAL to join with prequalified investors to enter negotiations with the LPRA for the award of a petroleum agreement for a block or blocks allocated to NOCAL for such purpose by the President.
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 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.
