Liberia’s oil sector plagued by corruption, watchdog says

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After nearly 15 years of civil wars that killed 250,000 people, Liberia stands on the edge of an oil and gas boom that could propel the country to renewal and growth -- or into a downward spiral of corruption and kleptocracy, according to a new report.

The country’s nascent energy sector is already plagued by corruption, weak oversight and outdated laws that have begun to leave their traces on foreign investors, according to the report by Global Witness, an international watchdog organization, and Liberian Oil and Gas Initiative, a coalition of four Liberian civil society groups.

The report said that in 2007, Oranto Petroleum, a Nigerian oil company, authorized payments to Liberian lawmakers to ratify contracts to develop two offshore blocks, an act considered bribery under Liberian law.

In 2010, Chevron bought 70 percent of those blocks. Though Chevron apparently did not know Oranto in 2007, by the time it bought its stake in the Oranto blocks, Liberia’s auditor general had already determined Oranto’s payment to the lawmakers to be bribery.

“Either Chevron’s due diligence was inadequate and failed to identify the payments, or else it did identify the ‘lobbying fees’ but chose to proceed with the deal anyway,” the report said.

Chevron said that it planned to start drilling exploratory wells this year and denied that it violated any laws in acquiring the Liberian blocks.

“Chevron’s engagement with the Liberian government in relation to our blocks has been made in accordance with all applicable legal and regulatory requirements. For competitive and commercial reasons, Chevron does not release specific financial details,” the company said in a statement.

According to the report, Liberian law mandates that such development agreements be publicly available, but the country’s national oil company failed to ensure the contracts were published.

The U.S. Geological Survey estimates that Sierra Leone, Ghana and Liberia, which are experiencing the new oil rush, sit atop about 3.2 billion barrels of oil and gas.

The report’s authors call for a series of reforms, including restructuring the agencies that oversee the energy sector, publishing all oil and gas contracts, better enforcement of existing laws and the creation of a separately managed account for oil and gas revenues.

Click here for the full report.

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-- Neela Banerjee