Despite the fact that oil has yet to flow, Liberia's energy sector is already beset by corruption, a lack of oversight and a poor regulatory framework, according to campaign group Global Witness.
Working with a local group, the Liberia Oil and Gas Initiative, Global Witness has produced a report detailing the opacity and graft which runs through Liberia's oil sector. With the country due to go to the polls in October, reforming the sector “must be a priority for any new government”.
The role of the National Oil Company (NOCAL) comes under sustained criticism in the report. As well as acting as regulator of the sector, NOCAL is a profit-making enterprise which does business with the companies it regulates. In order to pass oil contracts, NOCAL paid $120,400 to the legislature between 2006 and 2008, an act regarded as bribery under Liberian law.
Chevron also comes under fire in the report, for buying a 70 per cent stake in Liberian blocks owned by the Nigerian firm Oranto, which had made a payment to the legislature – information publicly available when Chevron purchased its stake.
The legal framework governing the oil sector is, according to Global Witness, deeply anachronistic and unsuitable for the current state of activities there. Much of the legislation was drawn up in the years during and immediately after the country's brutal civil war. The institutions responsible for oversight have weak capacity and mandate, and are beset by conflicts of interest. As a result, “Liberia's oil sector is already beset by corruption and illegality”.
The Environmental Protection Agency (EPA), for instance, has extremely limited capacity to carry out the environmental assessments necessary, and a top EPA official told Global Witness that the agency was entirely unprepared for the challenges of an offshore oil and gas industry.
The report urges the Liberian government, and the government elected later this year, to begin immediate reform of the sector. In particular, it calls for a reformed oil and gas law, strengthened environmental and social assessments, and more active efforts to root out corruption and abuse of power within the sector.
Sources: Global Witness
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