A new Liberian bid round for four offshore oil blocs is courting investment from ECOWAS companies, using an incentive that targets regional upstream operators that is the first of its kind in a bid round.
The ‘Local Content Participation’ provisions included in the design of the bid round will give preference to bidding groups with ECOWAS companies that partner with a Liberian company.
The bid round, run by NOCAL (National Oil Company of Liberia), opened in August and closes on November 14th. It re-opens four undrilled blocks for competitive bidding: LB-7, LB-7, LB-16 and LB-17 and is being organised with Ernst & Young (EY).
Bidders are being asked to bid on an upfront payment (“signature bonus”) to be paid to Liberia within a set number of days after their contract becomes effective.
But under the Local Content Participation provision, bids from groups that include either: a) a significant West African/ECOWAS upstream petroleum company that has committed to partner with a Liberian company, or b) a direct partnership with a Liberian company for a total of a 5 percent interest in the PSC by the Liberian company, will be considered to have 20 percent boost to their signature bonus amount.
NOCAL hopes that the ‘Local Content Participation’ provision will lead to meaningful Liberian participation in the upstream and downstream petroleum upstream businesses, as well as providing opportunities to regional players and helping develop the ECOWAS upstream sector.
Councilor Althea Sherman, NOCAL Chief Operating Officer, who is co-ordinating the round, said:
“We want a vibrant Liberian industry and jobs, but also a vibrant West African upstream sector. This provision will help do both. It will enable Liberian companies to develop capacity and take full advantage of the petroleum value chain, and give opportunities for regional companies to participate.
“Liberia’s domestic industry is undeveloped and requires mentoring. We think that ECOWAS partners who understand the region and have successfully developed capability from a low starting point themselves are best placed to do that.”
NOCAL will hold a road show on 23rd September in Lagos, Africa’s oil capital, to present seismic data and details of the contracts on offer to ECOWAS companies.
Ernst and Young (EY) are advising NOCAL on the structuring of the current bid round. EY is assisting NOCAL to evaluate bidder submissions, and will receive, review and make recommendations to NOCAL with respect to pre-qualification submissions from prospective bidders. EY will also receive and open the bids received. NOCAL expects that EY’s involvement in this bid round will ensure that companies are treated fairly and equally, that pre-qualification decisions are made on an objective basis, and that the terms of all bids are fully disclosed.