Liberia via the seat of Government, for the first time in its 163 years of existence as an independent nation and even including the colonial days, announced an agreement with a transnational company to carry out an exploration for the possible mining of crude oil in Liberian waters.
Some US$10b has already been assured for implementing the agreement. The Executive Mansion’s announcement this year crystallizes longtime suspicion that the list of Liberia’s natural resources is incomplete without oil, one of the world’s most lucrative sources of economic boom though others thought it was a remote possibility. But the history of oil economy in the developing world, particularly Africa, is an amalgam of incessant woes and limitless treasuries. As the Executive Branch passes on the Oil Exploration Agreement to the Legislature for rectification, questions are being raised from many quarters bordering not only on the good and evil of oil economy in Liberia, but also on the integrity and transparency of the selection process that has thrust the American Company, Chevron, on high for the deal. The Analyst reports.
Notwithstanding the troubling controversies characterizing the harvest of crude oils in other parts of Africa, notably Nigeria, Sudan and Angola, the publicity stunt accompanying the penning of an oil exploration agreement between the office of the President and Chevron has been quite deadening and sugarcoated, painting a paradise of Liberia upon its execution.
The Exhilarating Stunt
Local and international news agencies have been drumming up the good news; something that was for decades only whispered in the high corridors of Government: the existence of streams of hydrocarbon oil in Liberia.
In an official press statement, the Executive Mansion said the contract has been approved by the Executive and was submitting it to the Legislature for ratification.
The statement quotes President Sirleaf as saying that she was delighted to welcome Chevron as a partner for Liberia to explore our oil and gas assets, adding that energy is one of her top priorities.
With Chevron’s technical skills, she said, Liberia would be able to build its own capacity in the sector, making a meaningful contribution to economic growth and job creation.
Other media outlets quote Chevron spokesman Scott Walker as confirming “that an agreement to explore three deepwater concessions in Liberia and has been it submitted to the Legislature for ratification.”
According Walker the exploration agreement under consideration in Liberia was a crucial partnership for Liberia, promising that Chevron would bring to the country not only an important investment but also “the latest technologies, best practices in transparency and efficiencies, and an excellent record of community and social responsibility.”
The world’s superpower, the United States, whence hails Chevron, through its embassy near Monrovia has unreservedly tendered its heartfelt congratulations to the Government of Liberia on signing an agreement with Chevron Corporation for the exploration of three oil blocks in Liberian waters.
This is only the first step in a process, a US embassy press statement asserts this week, though not without calling on the Liberian Legislature to, as required by Liberian law, examine and then ratify the agreement for it to come into effect.
If approved, the US Government said, this three-year exploration project is expected to begin in the fourth quarter of 2010 and has a potential worth of US$10 billion.
This agreement would create jobs for Liberians, the United States assures, that will increase the national income and help develop other sectors of the economy.
The overwhelming favorable official responses to the Agreement not only put lawmakers on the spotlight to act but also send sharp waves of excitement in the spine of the public, thus sparking debate across the country.
Shortly before the exploration agreement was consummated by Executive Mansion, several transnational companies had long been finding their way into the potentially viable Liberian oil sector.
Experts had presaged that there was a possibility of the existence of 70% hydrocarbon oil in Liberia. Recently a Nigerian oil exploration company, Oranto Petroleum Limited, announced.
The pronouncement raised hopes that Africa’s oldest republic would join the world’s leading oil producing countries.
Oranto had reportedly expressed its exploration interests in Sierra Leone, Cote d’Ivoire, Togo, Nigeria, Equatorial Guinea, Chad and Niger.
A recent exploration by Oranto discovered oil in the Liberian capital, Monrovia. Oranto planned to pump US $120 million into oil exploration in Liberia between 2007 and 2009.
The good news was relayed by the General Manager of Oranto, Mr. Chika Nnamdi Eneanya, who flew to Liberia to formally sign agreements with his firm and the National Oil Company of Liberia (NOCAL).
The signed agreements gave exploration rights to Oranto to explore two blocks, block LB-11 and block LB-12. Each of the blocks has a total of approximately 3,750 square km.
The Nigerian company chief said his firm is targeting estimated oil reserves of 1.5 billion barrels in Liberia. But this calls for at least US $80 million for both the seismic survey and the exploration of two wells in 2008 and 2009.
Mr Eneanya said Oranto’s branching into Liberia means bringing development to the door step of the country’s citizens, creation of jobs and advancement in technology.
“We have done it in other countries, and we can do it here,” he assured.
The President of NOCAL, Dr. Fodee Kromah, said they entered into production sharing contract with Oranto for blocks LB-11 and LB-12.
He said the NOCAL/Oranto deal started three years back. Dr Kromah said by signing an agreement with the Nigerian company, NOCAL is turning its dreams into reality.
A UK registered oil company, Broadway Consolidated is also expected to sign production sharing contact agreement with NOCAL for block LB-13 next month.
Doubts, Obscurities Emerging In Oil Deals
Observers have begun to see irregularities and flaws in processes leading to the selection of foreign companies granted oil exploration permits.
In the selection of most of the companies, if not all, including Chevron, skeptics are questioning Government’s compliance with international best practices as well as the PPCC regulations.
A highly placed legislator, who does not want to be named as yet, said the rush for Liberia’s oil deposits have begun to show the ugly face of corruption.
“How are these companies selected?” he asked, and further asked: “Was there a bid that was nationally and international advertised for the sake of transparency? Who are the companies that competed? Are there records available on the bidding process and its result in case it was one that was held but not publicized?”
An Executive Mansion source who begged for anonymity because she was not authorized to talk to the press on the matter spoke of some international bid, which she said was published only abroad.
According to the source, a small and less capable company initially won the bid, but as it became clear that the bid winner lack the capacity, Chevron bought the smaller company’s winner right. And that was how the American-based company came into the picture.
But whether the official version or the allegation of breach of PPCC law is the true, President Sirleaf’s statements made to The Analyst during an interview months ago shed some light.
“I met also with the people from Chevron Oil Corporation because we have been encouraging them to come and do business. We think a big US Oil Company like Chevron coming into Liberia will send a big signal. Though, they had a meeting with me to conclude and we are working with the National Oil Company of Liberia (NOCAL) to see how they can conclude for Chevron to come,” the President told the Analyst.
Reading from the President’s version which is an outgrowth of one of her trips to the USA, it is clear Chevron was the Executive’s favorite for the Exploration Agreement.
Bid or no bid, Chevron needed to take charge of Liberia’s oil exploration because it “will send a big signal”.
But it would be a violation of the PPCC Law if this version of the source and President Sirleaf’s overtures are anything to go by.
Experts say the bid advertisement must be done in Liberia. According to the experts, [assuming there was a bid] if Chevron did not win the bid nor was a participant, then the second winner should have taken the place of the proven incapable winner.
Given the potentially explosive nature of a possible oil exploration activity in Liberia, steps to awarding contract needed to be highly transparent.
“This is clearly a false and dangerous start, and every Liberian must not allow the obscurity marring the country’s oil agreement to come to fruition,” a legislator who does not want to be named as yet told The Analyst
“But they will have a tough time with us because what is starting to bud at the onset of this development is something that will turn this country into our version of Nigeria’s Delta State or Ogoni Land,” he said. “If the Americans or Chevron in particular is claiming to be a paragon of transparency and international best practice, we want to see it demonstrated in the Agreement.”
Reality of “Doomsayers” Perspective
Liberia and its neighbor, Sierra Leone, are still nursing the wounds of conflict which many people believe was fanned by scrambles for gem stones; features now dominating the trial of former President Charles Taylor in The Hague over allegations of war crimes and crimes against humanity.
The announcement of possible oil exploration in Liberia is therefore generating concerns that oil is a troubling resource, which instead of being a blessing for poor Africans has turned out to be a curse.
One observer said as Liberia put behind itself the “Blood Diamond” scourge it is edging towards a “black gold” [crude oil] menace.
Skeptics contend that oil economy has proven to be a great source of hardship and misery in a number of countries on the African country.
It is an open secret, some say, that countries like Nigeria, Angola, Sudan and others which are principal petroleum-producing countries continue to be persistently afflicted by despotic and corrupt political leaderships underpinned by fragile economic development and violent conflicts.
This situation references the fact that foreign powers and their huge multinational oil companies often maneuver for control of the oil fields through clandestine operations or outright military intervention.
Dissents and pro-people advocacies in those countries are often repressed in the crudest manner, triggering unending violence and conflict and poverty.
These are experiences to reflect upon when pondering over news of Liberia-Chevron Oil Agreement:
In Nigeria and other oil producing countries, it is reported frequently how inequalities and environmental degradation perpetrated by oil extraction lead to protests, which are brutally quelled.
Opinions of how oil economies ironically breed hardship, corruption and conflict in Africa are unanimously highly amongst experts.
Other unfavorable and unbearable conditions related to oil economy in Africa include pollution, hunger amongst others.
It is reported that the lives of Niger Delta residents are at risk because of monumental contamination of their water and food resources; oil slicks are poisoning their drinking water and killing the fish they rely on for food.
According to the UN, 6800 oil spills occurred in the region between 1976 and 2001 – and one drop is enough to ruin twenty-five liters of drinking water.
Shell, Chevron and Agip all have operations in the Niger Delta. Whilst these companies make multi-million dollar profits, the thirty-million local residents live on less than a dollar a day.
Other experts say Sudan might be one of the fastest growing economies in Africa, but oil revenues rarely reach the people. Illicit capital flight, tax evasion and trade mispricing by multinational companies allow billions of dollars to be siphoned out of the country each year. Because of its pariah status, the Sudanese government has been particularly willing to receive under-the-table payments in exchange for granting foreign companies huge concessions and looking the other way. Meanwhile, foreign powers have taken an interest in oil-rich Sudan, shifting the region’s conflict from the local to the global level.
Years after the civil war ended, Angola remains a textbook example of the “resource curse” theory, with oil revenues accounting for up to 90% of export earnings and diamonds for the rest. Due to accounts located in tax havens, the profits of the secretive state-owned oil company Sonangol never reach the majority of the population. China and the US – the two biggest oil importers – are vying for control of an ever-bigger share of Angolan oil, all the while pretending that they are not dealing with a human-rights abusing government that exploits public resources on the pretext of development.
Liberia might not be immune to the woes attending other African countries whence big powers draw crude oil, some pundits.
Liberia is already plagued by massive corruption, its peace is fragile and the desperation for quick wealth cut across ages, a pundit said.
Liberia Plans Oil Exploration Deal With Chevron
Oil could be a menace, and the way the Americans are commencing the deal is speaking volumes, he further said.
Those who were close to former President Taylor say, a year and half before his coercive relinquishment of power, he spoke vividly about the existence of oil in Liberian waters and that the Americans were fighting strongly to take control.
Taylor is said to have divulged “off the record” to a group of discussants, including journalists, that the Americans were hunting him, hastening his departure from power, because he had refused oil deals proposed by the Americans.
According to Taylor, Liberia stood to hugely loose if he had accepted the deal. He had accordingly opted to draw in the French who were offering a more beneficial agreement.