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Two oil experts have dispelled public sentiment about Liberia’s speculated oil wealth and perception that production would begin soon to boost the economy.
One of the experts, Senator Cletus Wortorson who is also a Geologist and Geo-Physicist giving a lecture at a weeklong workshop organized by Penplusbytes for seven Liberian Journalists in Monrovia, noted that Liberia has 70% oil potential because rocks containing oil are found on the land.
Senator Wortorson also stressed that because these oil accommodating rocks contain cracks that oil can flow through, it is also possible the anticipated reserve be found far from Liberia; condition he said also predicts uncertainty of finding oil deposit in the country.
Historically, the Liberian Geologist and Geo-Physicist acknowledged that information about the existence of oil started in Liberia since 1960 with some companies coming in to carry on exploration, but result showed at the time that no oil was in the country in commercial quantity.
In recent times, companies including US based Chevron and African Petroleum have begun exploration in Liberia’s territorial waters to find out whether oil reserve could be here and can carry on production, and public perception has it that oil is being discovered and production would begin soon.
Commenting on this perception, Senator Wortorson indicated that even if oil were found, it would take many years to reach production stage because it is capital intensive and difficult to come out with a clear cut decision whether a particular area is an oil field.
He furthered that with the high level of cost attached to exploration, Liberia had to sign Production Sharing Contract (PSC) which allows the investor to underwrite the cost and during production the proceeds or commodity shared.
According to him, if oil be discovered and production begins in Liberia, little share will have to come to the country because the investor will have to also recover his/her expenses made during the exploration stage.
He furthered that money coming in now is a signature bonus from companies to allow them explore Liberia’s territorial waters for oil and not production share as many may believe.
In addition to Senator Wortorson’s expert view, Mr. Mohammed Amin, another expert on petroleum laws stressed that exploring oil in an area does not possibly indicate the existence of oil.
Moreover, Mr. Amin noted that production is also determined by the commercial quantity of oil, and if the quantity discovered is not encouraging, the company cannot risk its resources to produce.
Explaining “commercial quantity,” he said it is a volume of oil deposit that is proven by its cost of extraction and price on the world market.
He said the exploration stage Liberia is on would take seven years according to the Petroleum Law of Liberia to complete, noting, “three years to explore, two years for extension, and another two years for additional extension period.”
Under the contract, Mr. Amin said if no oil is found the company responsible for the exploration stands to lose while government will feel no effect. “This is why when production stage reaches the country receives less percentage while the company takes more share,” he noted.
Meanwhile, an official of the National Oil Company of Liberia (NOCAL), Fatu Gbedama has also clarified that there is potential of the existence of oil in Liberia, but sample found is not of commercial quantity.
In addition, Karl Cotrell, Country Manager of Chevron Liberia Limited during his presentation at the workshop on October 1, 2013 indicated that exploration has not shown reserve of oil in Liberia, and therefore Chevron has not reached decision of carrying on production as speculated.
Mr. Cotrell, like Senator Wortorson and Mr. Amin, also predicted that it may cost US$6billion to produce oil, and that reaching commercial production decision on one well showing sample of the existence of oil is not possible.
Source: Joaquin Sendolo/ Daily Observer
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