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October 12, 2014

Liberia’s current bid round sparks interest among global oil firms, says GlobalData analyst

Hydrocarbon potential is sparking interest in Liberia's current bid round despite challenges created by the Ebola virus, according to a GlobalData analyst.

Hydrocarbon potential is sparking interest in Liberia’s current bid round despite challenges created by the Ebola virus, according to a GlobalData analyst.

Liberia, which has considerable hydrocarbon potential and favourable fiscal terms, extended the bid round that offers offshore blocks LB-6, LB-7, LB-16, and LB-17, to 14 November, since being revealed on 5 August.

"To date, no commercial discoveries have been made in Liberia, but oil traces have been identified in 13 wells since the early 1970s."

Water depths in the blocks range from 500m to 3,800m.

GlobalData senior upstream analyst covering Europe, the Middle East and Africa, Gustavo Bianchotti, said the Ebola virus outbreak and poor infrastructure in Liberia will pose challenges to the round.

Bianchotti added that, to date, no commercial discoveries have been made in Liberia, but oil traces have been identified in 13 wells since the early 1970s.

Three oil discoveries from six wells have been confirmed in an active exploration programme in Liberia, and releasing the information from the rest of wells is expected to attract more attention to the country’s bid round.

Bianchotti said: "The country’s entire exploration activity is presently offshore in the Liberia Basin, which consists of 30 blocks. 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."

Liberia’s initial new terms introduced in 2013 will give companies a 50% participation share and eligibility for dividends payments if commercial discoveries move into production.

Bianchotti added: "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 licence holders can assess the prize of reserves that lie within their blocks."

Bianchotti noted that Liberia still has the potential to become a major West African oil and gas producer if ongoing exploration proves successful, as there are 18 offshore blocks available for subsequent rounds.

Energy

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