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Media Workshop July 30, 2012.  Background of Liberia Oil and gas development program  Reform Process  Draft Policy Paper.

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Presentation on theme: "Media Workshop July 30, 2012.  Background of Liberia Oil and gas development program  Reform Process  Draft Policy Paper."— Presentation transcript:

1 Media Workshop July 30, 2012

2  Background of Liberia Oil and gas development program  Reform Process  Draft Policy Paper

3 Background to Sector 1960s s 1980s 2011 First petroleum exploration awarded to Mr. Jake Simmons Chevron, Union Carbide, Reeds and Bets and Crystal Oil drilled four wells but did not engage in production of oil as no discoveries were declared. AMOCO Liberia Exploration Company signed two successive petroleum exploration agreements and drilled three offshore wells but oil deposit was discovered First Major Oil discovery in Liberia by African Petroleum

4 Liberia is not producing oil yet. Oil was only discovered for the first time in Feb 2012 We do not know yet if that discovery is in commercial quantities – enough to produce. It must be analyzed first If after analysis later this year it is proved to be commercial, production could start in 5 to 7 years

5  Oil is a finite resource – it is difficult to extract and it runs out eventually  Oil can generate huge revenues, but it also carries risks. It can increase corruption, inequality, damage the environment and even cause war  To benefit a country, it must be managed well. It must be produced and regulated properly, and revenues must be spent transparently on development  That requires the right policies, laws and capacity. That is why the Government is reforming the whole sector, starting with a new petroleum policy

6 History of Reform December 2011 January 2012 April 2012June 2012 August 2012 President Sirleaf requested the Chair of the HTC (NOCAL) to immediately proceed with the reform process PAG and HTC convened a round table discussion with different stakeholder s to officially commence the reform NOCAL organized retreat for HTC, PAG and civil society organizations in Buchanan to develop underlying principles for the draft policy HTC principals agreed on the underlying principles and authorized the drafting committee to develop the first draft policy paper Nationwide Consultation Conducted by HTC subcommitt ee and other key stakeholder s to generate comments from public

7 Hydrocarbon Technical Committee NOCAL (Chair) Ministry of Finance and Planning Ministry of Lands, Mines and Energy Ministry of Labour National Investment Commission Office of the Legal Advisor to the President Environmental Protection Agency Hydrocarbon Technical Committee NOCAL (Chair) Ministry of Finance and Planning Ministry of Lands, Mines and Energy Ministry of Labour National Investment Commission Office of the Legal Advisor to the President Environmental Protection Agency Policy and Law Drafting Team Drawn from subcommittee (Law Reform Comm. (Chair), NOCAL, MOJ, OLA, MLME) Policy and Law Drafting Team Drawn from subcommittee (Law Reform Comm. (Chair), NOCAL, MOJ, OLA, MLME) Policy Advisory Group (Norad, Revenue Watch Institute, ACET) Policy Advisory Group (Norad, Revenue Watch Institute, ACET) Technical Sub-Committee Representatives from same bodies as HTC Civil Society Goups (LEITI, LOGI, LipWatch) Technical Sub-Committee Representatives from same bodies as HTC Civil Society Goups (LEITI, LOGI, LipWatch) A cross-governmental task force is managing the process: HTC Principals review proposals of Sub- committee, and make final decisions on policies Sub-committee does main work of deliberating and generating policy Drafting Committee does detailed drafting External PAG advises and supports

8 Outcomes of the Reform Development of Petroleum Policy Paper Revision of the New Petroleum Law 2002 Revision of the Act Establishing NOCAL Establishing Model Production Sharing Contract (PSC) Development of a Revenue Management Act Deadline: Sep 2012 Deadline: December 2012 Deadline: March 2013 Deadline: TBC

9 Consultation Strategy 1. Public Local Communities and publics across Liberia and in the Diaspora 1. Public Local Communities and publics across Liberia and in the Diaspora 1. Town Hall Meeting (TH) - Approx 150 people -Short introduction -Facilitated open discussion 1. Town Hall Meeting (TH) - Approx 150 people -Short introduction -Facilitated open discussion Divide stakeholders into two broad categories: 2. Special Interest Groups Associations/Academia CSOs/Nos Youths/students IOCs and Businesses Legislature and caucuses 2. Special Interest Groups Associations/Academia CSOs/Nos Youths/students IOCs and Businesses Legislature and caucuses Two categories of events to match the stakeholder types 2. Roundtables (RT) -Approx 30 people -Closed door session -Detailed discussion 2. Roundtables (RT) -Approx 30 people -Closed door session -Detailed discussion

10 Consultation Strategy Counties 1.Nimba 2.Lofa Counties 1.Grand Bassa 2.Rivercess 3.Sinoe Counties 1.Grand Gedeh 2.Grand Kru 3.Maryland 4.River Gee Team 1 Team 2 Team 3 Team 4 Counties 1.Margibi 2.Bong Team 5 Counties 1.Bomi 2.Cape Mount 3.Gbarpolu Team 6 County 1.Montserrado

11 9 thematic areas 1. Resource Ownership and Maritime Boundary 2. Legal Framework and Institutional Oversight 3. State Participation and Fiscal Regime 4. Revenue Management & State – NOC Financial and Tax Arrangements 5. Transparency and Accountability 6. Safety, Health and Environment 7. Licensing and Contracting 8. Work Program and Operations 9. Local Content

12 Policy Goal “To manage Liberia's petroleum sector in a way that ensures that petroleum resources equitably benefit the people of Liberia now and in the future.”

13 A. Oil shall be used for the maximum benefit of all Liberians B. The Constitution says that mineral resources under the ground or sea shall be owned by the State, not by individuals. Land owners shall be compensated C. The oil sector shall be sustainably managed and seek the maximum Liberian participation D. The policy recognizes territorial boundaries, and seeks to amicably resolve any maritime boundary disputes E. It shall not exploit a resource on a boundary without an amicable agreement and unitization plan

14 A. The sector shall adhere to international leading practice and separate 3 key institutional roles to avoid conflicts of interest B. NOCAL shall manage the commercial interests of the State and state equity C. The relevant Ministry (MLME) shall manage policy-making and forming regulations D. Regulation shall be managed by a new Independent Regulator. This regulator shall be formed over the coming years, and begin at the start of substantial commercial production of oil E. Until then, NOCAL shall act as regulator along with other regulatory bodies (eg EPA, LMA)

15 A. The fiscal regime shall create incentives for responsible investors while providing a fair and equitable return to Liberia B. The fiscal regime shall include ‘progressive’ elements, so that returns to the country increase with overall returns C. The overall fiscal regime shall be a coherent whole, balancing different revenue streams and using a range of fiscal tools D. The fiscal regime shall be transparent and predictable, and available to the public E. The State shall participate in the sector through carried interest

16 A. The Goal of revenue management is to use oil revenues for the benefit of ALL Liberians regardless of region or background B. The government shall put in place mechanisms to facilitate efficient collection of revenues and auditing C. Revenues shall be put in designated accounts for intergenerational equity, future investment, and stabilizing oil price fluctuations D. NOCAL shall eventually be funded through its state equity share. Until that share is actualized, the Government shall ensure it has sufficient budget allocations E. Revenue Management systems shall strike the balance between investment in development needs like education and infrastructure, and saving for the future.

17 A. The Government shall operate with complete transparency and accountability in the sector B. The sector shall adhere to the principles of LEITI and regularly publish information about revenues C. The Government shall encourage active engagement of civil society organizations in monitoring and reporting D. The legal framework shall establish the right for citizens to seek legal redress in the judicial system E. The Government shall commission annual audits of petroleum activities by qualified auditing companies awarded by bids F. Government shall adhere to recognized principles of gender balance and equality G. All public officials and civil servants within the petroleum sector shall undergo periodic checks for mismanagement.

18 A. All petroleum operations will require an Environmental and Social Impact Assessment, including a spill contingency plan and an Emergency Preparedness Response Plan F. At the end of a petroleum activity, the environment shall, to the extent possible, be brought back to its original state A. It promote using best practices for prevention and rapid emergency response mechanisms designed to mitigate air and water pollution B. The Government shall review and update waste disposal standards including inspection, monitoring, evaluation and control mechanisms C. The holders of a license, its parent, subsidiaries, and contractors shall be strictly, jointly and severally liable for pollution, harm to the environment, property or injury to persons resulting from their operations

19 A. The Government shall adopt a hybrid form of Petroleum Sharing Contract B. The Government shall adopt the principles of competitive bidding, pre-qualification, and publish the bid criteria C. In the case of a reservoir spanning more than one block, unitization shall be applied D. The government shall set criteria for transfer of license or operatorship including due diligence and payment of transfer fees. Any transfer shall be subject to Government approval E. The assets of each license shall be managed independently or “ring fenced”

20 A. The exploration program shall be divided into 3 phases: i.First exploration period for 3 years ii.Second exploration period for 2 years iii.Third exploration period for 2 years B. Government shall establish effective systems for monitoring and auditing petroleum operations C. Work plans shall be subject to Government approval D. Companies must relinquish non-commercially viable areas to the Government E. All data shall belong to the State F. All petroleum companies shall be expected to optimize production G. Spare capacity in infrastructure shall be made available to other users

21  The value created in the Liberian economy by systematic development of capacity and capabilities through the utilization of indigenous Liberian human and material resources, and services.” A. A Liberian-owned company is defined as: “a company or any business venture where a minimum of 25% of its shares is owned by Liberians.” B. The Government shall create a local content strategy to protect Liberian business interests and develop Liberians to achieve maximum benefits from petroleum resources C. The Government shall prioritize local and International Oil and Services Companies with proven track records of support for local content during the bidding process D. Liberian goods and services shall be used in the conduct of petroleum activities to the extent feasible

22 A. Government will enact laws, policies and regulations for inclusion in contracts and other legal instruments that will commit international oil companies to: i.Prioritize employment of qualified and competent Liberian citizens in the oil and gas and other associate industries; ii.Train Liberians in relevant fields relating to the oil and gas sector; iii.Contribute to institutions involved in the training of Liberian citizens to enable them to be eligible and meet the requirements for positions in the oil industry iv.Contribute to community development programs through joint ventures to transfer technology. B. The Government shall utilize oil revenue to support, develop and expand public and private entities in order to strengthen their capacity in service delivery.

23 Questions, Discussion, Input Thank You!!!


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