Latest update April 23rd, 2024 12:59 AM
Jan 24, 2021 News
Kaieteur News- Even though Liberiadoes not have a well-developed upstream oil and gas industry, it has certainly taken several measures to ensure that its citizens are well protected in the deals stuck with oil giants like ExxonMobil.
This is quite evident in a Production Sharing Agreement (PSA) that it signed with the oil titan in 2013.
In that agreement, it notes that Exxon Mobil is required to contribute to a Rural Energy Fund (REFUND) in accordance with the African nation’s National Energy Policy.
The provision in the agreement outlines that the fund was established to integrate renewable energy technologies into rural development.
Considering that oil is a finite resource, the agreement goes on to note that it is the policy of the State that oil resources be used to support the development of renewable energy resources in order to ensure energy security and sustainability upon cessation of petroleum production.
It was further noted that the Contractor should therefore make an annual contribution of US$100,000 during exploration and production through the National Oil Company of Liberia to the REFUND.
The provision states that the first payment shall be made within thirty (30) days of the Trigger Event Date of the Contract and thirty (30) days after each subsequent anniversary of the Effective Date (March 8, 2013).
The agreement also notes that the amounts payable pursuant to Article 19.4(a) during the exploration and appraisal phase shall be adjusted annually for inflation for each payment after the initial payment in proportion to the change in Deflator over the Contract Year ending on the last day of the Calendar Quarter for which a Deflator has been published immediately prior to the due date of each payment.
Importantly, Liberia was keen to note that the contribution to the REFUND referred to in Article 19.4(a) will not be recoverable and shall therefore not be treated as Petroleum Costs.
In addition to this contribution, Liberia also requires ExxonMobil and other companies it signed such agreements with, to make payments to a Hydrocarbon Development Fund, which would be used to stimulate research in the field of hydrocarbons, most especially in continental areas, and to assist the State in its overall goal of achieving energy sustainability.
Within thirty (30) days of the Trigger Event Date of this Contract, the Contractor is mandated to make a one-time contribution of Five hundred thousand Dollars (US$500,000) to this fund.
The provision said that the contribution to the Hydrocarbon Development Fund referred to in Article 19.3(a) will not be recoverable and shall therefore not be treated as Petroleum Costs.
Although the Granger Administration and the PPP Government have both advocated for the need for renewable energy, neither have asked for the oil companies to make similar contributions.
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