Oil: How Could Liberians Settle for Only Five Percent?

Oil: How Could Liberians Settle for Only Five Percent?

Liberia oil blocs                                    P. Courtesy

Liberians heaved a deep sigh of relief when Liberia recently announced to have “discovered” oil in commercial quantities, joining her West African sisters: Ghana, Nigeria and some others. Oil deposits in the West African coast have existed for decades. In my opinion, there is no “discovery” of oil anywhere in West Africa, but the exploitation of the oil belt that runs along the coast of the entire region which the oil executives knew about for decades but did not care to build rigs till now as they tried to gain control over the unstable situations of the Middle East at that time.

Africans must not be deceived. The oil scavengers are now looming over West Africa and if we are not careful to choose rightly between the Nigerian and Ghanaian models of exploitation, there will be no real benefit and this political bonanza could definitely be a curse for the Liberian people in the long run.

Obviously, like their Ghanaian neighbours, Liberians look forward to the prosperity that the oil and gas finds “will bring” to their country. If well managed, the black gold could transform the destiny of the entire country for generations to come through improved living standards.

Unfortunately, these aspirations may turn out to be a nightmare if the people do not rise up to the government to adequately scrutinize the oil “agreement” and set up a national platform for dialogue on the best way forward, so that together, there will be dialogue to secure a reasonable percentage share (70% and above) for the people whose interest the government claims to serve.

According to a statement issued by the Nobel Peace Prize winner, President Ellen Johnson, the American Oil company, Exxon Mobil will own a whopping 80% of the oil shares discovered in Liberia, while their Canadian neighbours, the Canadian Overseas Petroleum Limited (COPL), will own 20%. Many people are wondering: where does this place the people of Liberia? What share does the government of Liberia have in this oil deal? The African people would want to know.

Again, why the rush to explore the oil without first putting adequate measures in place to guard against the challenges that may accompany the oil exploration in the near future? Where is the government rushing to? Is President Ellen Johnson considering early retirement in the coming months? Has the government considered building local refineries to process the crude oil or Liberia will follow the Nigerian model where the raw crude is shipped to Europe and the refined product is shipped back to the country at ridiculous prices? Has the government considered training local engineers to take over the management of the oil industry within the shortest possible time? Why must African leaders always allow such sensitive sectors of their economy to be held hostage by a few foreign corporations?

We (Africans) have a major problem. We rush to commission most projects without taking time to plan against the unforeseeable challenges that may likely show up in the near future.

Is Liberia well-prepared to deal with corruption in the oil and gas sector? Is the government prepared to face the angry youth who are likely to take up arms as we see in Nigeria? In Nigeria, many agitated so-called rebel groups rose up and took arms to fight the corruption in the oil and gas sector, a situation which is currently out of control. Will Liberia learn some lessons from Nigeria or as usual, wait unprepared for the problems to come up before they run to NATO for solutions?

Although President Ellen Johnson has not said what would happen to the Liberian share, the President and CEO of the National Oil Company of Liberia (NOCAL), Dr. Randolph McClain, explained that the negotiating team of the Liberian government secured a 5% citizens participation share in LB-13 and a further 5% royalty on oil produced from wells drilled under water depths of 0–1500 meters. Angered by the shocking news, Okechuku, a PhD student at Oxford University wondered:

“When Liberia was in crisis, did the US and Canada send any help? I’m shocked at how a country's wealth is being giving away for peanuts. Is this the reason why the president was awarded the Nobel Prize some months ago? Ellen Johnson has always been the World Bank’s darling girl anyway. You don’t get a Nobel Peace Award without signing such deals.”

The man is absolutely right! Of course that is the price the people pay when our leaders are given such awards by special interest foreign groups. Remember Ellen Johnson was given the Nobel Prize somewhere last year? Yeah, that was when the “actual oil deal” was sealed. The selfishness of our leaders is the reason for our underdevelopment. Our people must say no to all NGOs that are buying-off our leaders and our independence. It's a shame. How can a country that has suffered over a decade of economic hardship, settle for some 10% ‘royalty’ in a multi-billion resource like oil?

Is this all that our forefathers died for? Is this the hope and the dream the government sought to build when the people gave out their mandate? But more seriously, how much of this 10% will end up in the offshore accounts of many of these ‘negotiating team’? This still remains unclear.

Meanwhile at the moment, although early indications are positive, the exact extent of oil deposits found in the country still remains unknown. Leaders have already settled for peanuts from big oil corporations as they hand over the oil reserves to the western firms with virtually nothing left for the ordinary Liberian in the near future.

The Canadian Overseas Petroleum Limited (COPL) recently disclosed offering the politicians, a mere U$45m in cash toward the purchase of block 13 of Liberia's oil industry, a move which will see Liberia lose billions of dollars every year to the COPL. I wonder why these politicians will just sell the oil reserves for merely $45m when the actual oil deposit is yet unknown. How many of the poor Liberian families will benefit from the $45m given to the politicians?

Liberian politicians have been blinded by the mere $45millon they received as “signature fee,” forgetting about the long term financial loses, the environmental damage and all the hardships the country will endure while their foreign ‘donors’ bag a whopping 95% profit shares on a monthly basis! Why are African leaders keen on the few millions today, while they ignore the billions which the big oil companies will be reaping in the coming years?

Why are such sensitive agreements held in the corridors of secrecy when the destiny of entire generations depends on them? Why must the good people of Liberia allow a few selfish, greedy and corrupt politicians to negotiate on their behalf in camera?

For a country like Liberia which had been plunged into civil war and suffered decades of economic hardship, seeing the need to put such oil agreements in the public domain, and discussing them in consultation with leaders of the regional block would have been a better decision.  But as usual, African leaders never consult their colleagues during such critical moments. Only a few millions into their offshore accounts and the agreement is sealed, leaving the poor masses to their fate.

Will Liberia Repeat Nigeria and Ghana’s Mistakes?

In Nigeria for instance, as western oil companies loot some $140 Billion a year of the country’s oil, two-thirds of the country’s 160 million people live on less than $2 a day. Western oil companies are literally looting Nigeria’s oil, paying as little as a 9% royalty. Simply put, at $100 a barrel, the western oil companies get $91 and Nigeria only gets $9. Or more shockingly, Big Oil makes $140 billion a year vs. Nigeria’s $10 Billion, writes Thomas C. Mountain as he reveals the shocking reasons why many Nigerians remain the poorest in Africa despite the country’s plenteous oil and gas.

Ghana's Oil Has Been Sold Off Already

Today in Ghana, when Tullow Oils makes a profit of $3 billion, Ghana gets only $3 million out of that. Can this agreement truly better the lives of Ghanaians? Yet, former president Kuffuor, the man who recently suggested that bad leadership is Africa’s problem, was the same president who signed this oil agreement with foreign firms. This is what happens when foreign corporations are allowed to secretly finance our politicians into power during election periods!

African citizenry must rebel against such dangerous oil agreements. Legislations must be introduced to ban all politicians from sourcing for funds from abroad during elections periods. The country’s planners should not neglect other sectors of the economy. They should diversify to avoid exogenous shocks due to volatility in the prices of oil on the international markets.

Privatization of state resources must cease with immediate effect. Governments cannot continue with the habit of selling off every strategic resource without adequate long term planning. African leaders must train more engineers to help build our industries so that we can manage the exploitation of our resources.  Africans must develop the habit of managing their own affairs.

This is the beginning of a long walk to perpetual poverty and economic impoverishment in Liberia as Big Oil corporations begin to loot Liberian worth. For very $100billion of profits made by the oil corporations, Liberians will only get some few $100 million donations.

I miss Chavez, I miss Gadhafi. These leaders showed oil-rich Africans the way, but due to corruption and selfishness, our leaders will not follow their steps. Ghanaians have already settled for some 10% share in their most-talked about oil. Nigerians have quietly accepted 9% for more than 50yrs. Liberians must never settle for 5%! Anything less than 70% must be rejected by the people. This is the only way we can fight poverty and say enough to the foreign corporations who continue to enrich themselves with African resources while the African people wallow in poverty. It’s time we said enough is enough!

By Honourable Saka

The writer honourablesaka@yahoo.co.uk is a Pan-African analyst and the founder of the Project Pan-Africa (PPA), an organization that was established to unlock the minds of the African youth to take Africa’s destiny into their hands.