Oil hopes run deep in troubled Liberia

MONROVIA Mon Oct 10, 2011 2:41pm EDT

MONROVIA (Reuters) - On the third floor of a mold-blackened building in central Monrovia, the head of Liberia's state oil company pores over the maps of offshore waters and imagines the deep pockets of crude oil he feels certain are there.

For a nation still suffering the after-effects of one of Africa's most brutal wars, the reservoirs hidden beneath the Atlantic waves could spell salvation.

"It would mean a whole brand new series of possibilities for Liberia," said Christopher Neyor, the head of the state-run National Oil Company, talking on the eve of the West African state's second presidential election since a 1989-2003 civil war.

"The geology is fascinating and all of the output of the results we have say yes, there is a presence of hydrocarbon."

Liberia sits on the cusp of potentially profound change, with the poll potentially paving the way for investment in resources sealed off by the years of bloodshed.

Liberian President Ellen Johnson-Sirleaf will face opposition rival Winston Tubman and 14 others in a first-round election October 11 that analysts say has the potential to turn violent if results are not accepted by party supporters.

While miners are targeting Liberia's iron ore deposits, U.S. oil explorer Anadarko (APC.N) is drilling off the coast with results due in coming weeks, and some of the world's top oil firms are lining up for additional offshore acreage.

"A lot of the majors are coming, and we are very pleased with that," Neyor, a U.S.-educated engineer who grew up in central Liberia, told Reuters in an interview on Monday.

"From the geology, the assessment shows great prospective. It is similar in geology to the Ghanaian basin and some of the activities in Equatorial Guinea."

Ghana joined the club of African oil producers last year after starting up its offshore Jubilee field - launching double-digit economic growth -- and Equatorial Guinea is one of sub-Saharan Africa's top energy exporters.

Neyor said U.S. giant Exxon Mobil (XOM.N), France's Total (TOTF.PA), and Brazil's Petrobras had approached Liberia for exploration rights. China's CNOOC (0883.HK) was negotiating terms of two near-shore blocks awarded in a bidding process, he added.

He said an oil find was possible "pretty soon."

"Within the next 12 months, the prospect looks very good," he said.

"Natural resources can lift people out of poverty if they are managed well. The president has a line that Liberia is not poor, it is just poorly managed. If we can do that, I believe we can lift our country out of poverty in a relatively short time."

PEACE IS KEY

If Johnson-Sirleaf loses, Neyor will likely be replaced, but he has said his goal is to lay the groundwork for future heads of the industry.

"This election is critical to our future. I believe that Liberians will be cautious to stay the course and to ensure that we provide this kind of atmosphere that will be good for our prosperity," Neyor said. "Peace and stability attracts investment."

After awards by Johnson-Sirleaf's government to Anadarko, Tullow (TLW.L), Chevron (CVX.N), CNOOC and others, Neyor said the country had five near-shore blocks and 17 ultra-deep water blocks remaining unawarded - all of which could be put up for bidding next year.

He said he was reviewing Liberia's petroleum laws to ensure any future oil finds benefit ordinary Liberians, desperate for jobs and infrastructure.

"One of the problems we've had in our part of the world is oil discoveries and large deposits of natural resources have been more of a curse than a blessing," he said.

"We are all geared toward ensuring that we work together to come up with the framework to manage our oil revenue. At least we know from experience in Africa how not to do it."

He said the National Oil Company was finalizing proposals on local content, royalties and state share in projects and would incorporate industry feedback before presenting the proposals to the cabinet.

"There must transparency, there must be accountability, and there must be fairness for our people."

He said some of the other proposals could be modeled on Norway's system of depositing a share of oil revenues into a sovereign fund, though he added that a priority would be to "ring-fence some revenues for infrastructure, roads, bridges, power plants, schools and hospitals."

(Editing by Mark John and Marguerita Choy)