Liberia’s current invitation-only bidding round has ignited interest among international oil companies, due to the country’s considerable hydrocarbon potential and favorable fiscal terms. However, the Ebola virus outbreak and Liberia’s poor infrastructure will pose challenges to the round, says an analyst with research and consulting firm GlobalData.
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Map of Liberia. From ExxonMobil. |
Since being announced on 5 August 2014, Liberia’s bid round, which offers offshore Blocks LB-6, LB-7, LB-16 and LB-17, located in water depths ranging from 500 to 3800m, has been extended to 14 November 2014.
According to Gustavo Bianchotti, GlobalData’s senior upstream analyst covering Europe, the Middle East and Africa, no commercial discoveries have been made in Liberia to date, but oil traces have been found in 13 wells since the early 1970s. An active exploration program has resulted in three confirmed oil discoveries from six wells, and releasing the data from the remaining wells would attract more attention to Liberia’s bid round.
“The country’s entire exploration activity is presently offshore in the Liberia Basin, which consists of 30 blocks,” says Bianchotti. “While none of the blocks offered in the current bidding round have been drilled, seismic studies suggest that there is hydrocarbon potential in the basin’s Middle to Upper Cretaceous fan systems.”
In 2013, the first new terms were introduced in Liberia, which entitled companies to a 50% participation share and eligibility for dividends payments if commercial discoveries culminated in production.
Bianchotti says that Liberia is seeking to introduce a law that would improve on the human and institutional capacity necessary for its petroleum sector development and provide a tax waiver for prospective investors.
“However, the law is still pending in the House of Representatives and this delay will affect how quickly current and future license holders can assess the prize of reserves that lie within their blocks,” says Bianchotti.
Bianchotti concludes that as there are 18 offshore blocks available for subsequent rounds, Liberia still has the potential to become a major West African oil and gas producer if ongoing exploration proves successful.
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