Liberia is opening the door to commercial oil discovery and development opportunities as the country encourages oil companies to participate in its bidding round, which ends in December 2014.

Four undrilled offshore petroleum exploration blocks—LB-6, LB-7, LB-16 and LB-17—are available.

“We are proud to be offering this acreage—which has great prospects. Liberia is facing a terrible health crisis as we speak, making it all the more important that we secure the long-term growth of our country,” Althea E. Sherman, COO of the Oil Company of Liberia (NOCAL), said in a prepared statement. “We have attracted some of the world’s best companies to date, and we hope that this transparent, competitive round can attract more. It will also enable us to develop these vacated blocks while we complete our reforms of the sector and before any new acreage is made available.”

Liberia is among the countries that have been hit by the deadly Ebola outbreak, which the World Health Organization said has claimed the lives of more than 2,000 people in West Africa. Other countries affected by the virus are Guinea, Sierra Leone, Nigeria and Senegal. Some airlines have suspended flights into Liberia, and this may have a negative impact on the current bid round.

The bid round was promoted at an international road show on Aug. 19 in London where a “packed room of international investors” gathered, NOCAL said. In an email to E&P, Sherman said another road show—the third promoting the 2014 bid round—will be held Sept. 23 in Lagos, Nigeria.

“It will be a big step forward for Liberia if the oil round is concluded successfully. Its quest to become an oil producer in Africa will have received a boost and IOCs [international oil companies] and other players will have more confident to double up on their exploration efforts and produce the first as expected in six to seven years from now,” an oil expert in Lagos said.

Old Offshore Acreage

There are two notable aspects to the bidding exercise that began in August 2014. One is that the four offshore blocks are old acreage, which was made available during bid rounds held years ago under the 2002 Petroleum Act. Two, the bid round is the first of its kind to give preference to bid groups that contain companies from Liberia and the Economic Community of West African States (ECOWAS). There are 15 countries in the community.

Blocks LB-6 and LB-7 were part of the 2007-2008 Liberia Basin bid round. NOCAL said no production-sharing contracts (PSCs) for those bid rounds ever became effective, and no drilling or exploration took place.

NOCAL said it terminated in 2013 efforts to reach an agreement with the party granted the opportunity to negotiate the PSCs for those blocks, and declared the blocks available for a subsequent bid round.

Also, blocks LB-16 and BL-17 were part of the 2005 Liberia bid round. No drilling took place in either block. The PSCs that covered the blocks were relinquished by Anadarko and its partners in 2012 and 2013.

Reacting to media reports in Liberia that the four blocks are being auctioned or sold, Cyrus Wieh Badio, director of public affairs for NOCAL, said, that “to suggest that the blocks are being sold, presupposes that Liberia loses ownership. That is not the case. The Liberian state owns the oil under the seabed.”

Badio added that PSCs for LB-6 and LB-7 were awarded and negotiated but never fully executed. “In other words, no legally binding PCSs, as in accordance with laws of Liberia, for these two blocks were given,” he said.

Regarding LB-16 and LB-17, Badio noted that PCSs were held by IOCs, which decided to relinquish the blocks. He said it was standard petroleum industry practice for relinquished blocks to be made available for oil companies.

“It is good for the country that these blocks are being put out for lease,” NOCAL President and CEO Randolph McClain said in a statement, adding “doing so will generate more interest and help generate the revenue government so urgently needs for economic, human, social and other development programs.”

The bid round, according to NOCAL, will open the way for development of the vacated acreage, thereby increasing Liberia’s prospect for commercial discovery and development. It also continues the modernization in the terms of Liberia’s PCSs begun in the recent Block LB-13 transaction and is being done in a manner consistent with the draft petroleum law now before Liberia’s Legislature. Liberia signed a PSC with Exxon Mobil to develop offshore Block 13 (LB-13) in April 2013. The contract gives Exxon Mobil an 80% interest in the block and Canadian Overseas Petroleum (COPL) a 20% interest.

Bid Round Structure, Process

NOCAL said qualified bidders will be evaluated on signature bonus and proposals to build the Liberian industry. Bidders will be asked to bid on an upfront payment (signature bonus) to be paid to the government within a set number of days after their contract becomes effective.

The national oil company added that Liberia is launching an innovative approach to develop Liberian companies that aspire to operate in upstream oil exploration or services, saying Liberia’s domestic industry is underdeveloped and requires mentoring, support and help from partners that have successfully developed local capability from a low starting point themselves.

For that reason, bids from groups that include a significant West African/ECOWAS upstream petroleum company that includes a Liberian partner will have their bids evaluated with a 20% uplift in their signature bonus proposals. This, NOCAL said “will provide Liberian companies with opportunities for mentorship and assistance.”

“Such regional companies will be more understanding of the issues facing and needs of fledging Liberian companies because they are more similar in size, background and growth trajectory than the large, established international oil companies,” NOCAL said in the news release. “The ultimate goal is to develop Liberian entrepreneurs who see the potential for local business around the oil sector and who will form the heart of a vibrant small and medium enterprise sector creating jobs in Liberia for Liberians.”

According to NOCAL’s revised schedule for the bidding round, bids must be submitted no later than 3 p.m. London time Nov. 14. Bids will be opened Nov. 17 with bid evaluation estimated to last seven days. Winners will be notified on Nov. 24. The PSC signing ceremony will take place on Dec. 1 followed by ratification by the Legislature, signature into law by the president and publication into handbills on Dec. 2. The payment of signature bonus and award of license fee takes place on Dec. 16.

Liberia isn’t expected to produce its first oil until about six years from now. The country has 30 blocks in total: 17 offshore and 13 ultradeep. Liberia is concentrating on exploration efforts for its existing 17 offshore blocks that lie in two geological basins (Liberia Basin and Harper Basin) and carrying out oil and gas reforms aimed at introduction of a new petroleum law.

Liberia’s Legislature is reviewing the Petroleum (Exploration and Production) Act 2013, which will govern upstream petroleum activities, including the government’s institutional framework, transparency rules and procedures for licensing. The other is the National Oil Company of Liberia (NOCAL) Act 2013 which will define the role of the national oil company. The review will result in a draft oil law for the country.