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Liberian Crude Is a Game Changer

By T. Q. Harris Jr.


There is no doubt Liberia is well on its way to becoming an oil producing country; but along with the benefits this is likely to bring, there’s certain to be enormous challenges as well as the possibility of a disaster. Maximizing benefits and minimizing the challenge requires meticulous planning and strategizing at the current pre-production stages. With the stakes as high as they are, there is no time for learning on the job. Therefore we must at this juncture engage the services of veteran oil experts who will provide the knowhow in formulating policies that will produce maximum benefit for the inheritors of this vital national asset.

The discovery of crude oil in Liberia is a real game changer. If managed properly, the “black gold” could restore all that the locusts have devoured. With only a reasonable quantity of commercial grade crude, Liberians could forever banish poverty from our midst; decimate illiteracy; dramatically increase life expectancy; radically improve standards of living; and totally transform the country into the most livable in South Saharan Africa. But given the history of resource mismanagement in Liberia, this is highly unlikely unless we – the People – stand up and demand change to the process. The current policies mostly favor investors and the elite. Moreover, the individuals currently managing this national treasure lack the requisite knowledge and experienced, as evidenced by the Block-13 saga.

As the story goes, a company called Peppercoast was awarded the contract for Block-13 despite its inability to perform. Upon receiving the legally binding agreement Peppercoast rushed to the marketplace and sold 70% to Exxon Mobil and the remaining 30% to Canadian Overseas Petroleum Ltd, (COPL). As soon as the deals were consummated, Peppercoast returned to NOCAL requesting an “alternative transaction”. In other words, Peppercoast demanded that Block-13 be transferred to Exxon Mobil and Canadian Overseas Petroleum after defaulting on its obligations. But rather than penalize the company, officials at NOCAL opted to go along with the scam which raises several troubling questions: Why did NOCAL let Peppercoast off the hook without paying a price? Also, if Peppercoast could persuade both Exxon Mobil and Canadian Overseas Petroleum to invest in oil Block-13; why couldn’t those in whom we have entrusted this vital national asset? And how much did Peppercoast pocket from this deal?

The behavior of Peppercoast as it relates to Block-13 are not unlike that exhibited by Elenito – a bogus foreign entity that was also awarded a major iron ore mining contract by the Government of Liberia. Having the legally binding contract in hand, Elenito rushed to the marketplace and traded it for a whopping $200 Million without putting as much as a shovel into the ground. We now know that Elenito did not have any previous experience in the mining industry.

Speaking recently at a press briefing, the Chief Executive Officer (CEO) of NOCAL seemed quite excited about the latest contract for Block-13 which has been submitted to the President for signature. He believes it is the best deal possible, especially in light of the $50 Million signature bonus. And he also described it as unprecedented. The previous record stands at $3.33 Million. But what the CEO failed to mention is, the $3.33 Million was also negotiated by NOCAL and this too was considered impressive.

Now how can we be certain that terms of this new contract are the best we could possibly get for our oil? Frankly, the massive increase from $3.33 Million to $50 million within a relative short period of time causes one to ponder as to whether the individuals sourcing, vetting, and awarding contracts are learning on the job at the expense of the
Liberian people.

Furthermore, the CEO was eager to announce that the latest oil Block-13 contract includes revenue sharing for the citizens if exploration and development are successful. It sounds great, except that no amount was given, not even an estimate. What if Exxon Mobil and COPL, following a successful exploration, decide to give each citizen $5.00? Who could object when the amount of revenue sharing was never stated? How about an audit to determine the amount invested before discussing revenue sharing?

In order to prevent crude oil from going the way of rubber, diamonds, gold, and iron ore; we propose that before signing and ratification of the latest contract for Block-13, the Presidency must first hire a team of veteran oil experts (preferably retirees) who have working knowledge of oil industries in the following countries: Norway, Iraq and Nigeria. This high power team of professionals shall be known as the Executive Petroleum Advisory Council (EPAC). They shall be well-compensated and given a 4-year contract with option to renew. Performance shall be the benchmark.

Among it various responsibilities, EPAC shall advise the President; prepare a comprehensive document on the formulation of sound oil policies; and provide guidance in the formation of the Liberian Petroleum Institute (LPI). It shall also establish guidelines for oil block acquisition and provide oversight in all contract negotiations. The latest Block-13 contract could be EPAC first major project and the launch of a vibrant Liberian oil industry.

As to the Liberian Petroleum Institute, it shall be a think tank which specializes in all aspects of the oil industry, conducting research for the government and providing up-to-date information on trends within the global oil industry. Its services and resources shall also be contracted to domestic as well as international clients. Funding for the Executive Petroleum Advisory Council and the Liberian Petroleum Institute shall come from revenue generated through oil block bidding fees and signature bonuses, among others.

In conclusion, the current system for sourcing, vetting, and awarding contracts is ineffective and unproductive. Moreover, it is prone to corruption. And, evidently, the National Oil Company (NOCAL), as it currently exists, does not have the requisite capabilities to effectively manage this vital national asset which has the potential to radically transform the nation or plunge Liberians deeper into poverty. Therefore we must bring on board at these early stages the world’s best oil experts in order to maximize benefits and limit the challenge of becoming a successful oil producing country.

About the Author: Mr. T. Q. Harris, Jr. currently resides in Liberia. He has founded and managed several companies. He also worked assiduously to bring an end to the Liberian Civil War and provided humanitarian assistance to thousands of displaced Liberians. In the 1997 election he participated as a vice presidential candidate. And in 2011 Mr. Harris was elected standard bearer of the Freedom Alliance Party, but later withdrew from the race. You may contact him by email – or phone – 231 88 040-2479.

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