PRESENTATION TO THE AAPG OVERVIEW OF THE UPSTREAM PETROLEUM SECTOR REPUBLIC OF LIBERIA, WEST AFRICA Presented by: Marie E-Leigh Parker Vice President for Administration National Oil Company of Liberia

Major Policy Objective of the Government : To create an enabling environment for private sector investment in the upstream petroleum sector and to ensure sustainable development if petroleum resources are discovered .

INTRODUCTION LIBERIA IS LOCATED ON THE WST COAST OF AFRICA BOUNDE BY SIERRA LEONE, GUINEA AND IVORY COAST

Socio-Economic Framework INTRODUCTION Socio-Economic Framework Liberia is the only African Country with colonial ties to the USA Its Constitution, Laws, flag and other national symbols are modeled after those of the USA

INTRODUCTION Liberia’s Capitol Building on Capitol Hill, Monrovia recently renovated

INTRODUCTION In Liberia you will see places named Capitol Hill, Maryland, West Point, etc. Liberia believes and practices the Free-market economy

INTRODUCTION Like most countries, Liberia had a period of civil conflict (intermittently from 1990 to 2003); We remember the French Revolution, the American civil war, etc. The period of civil conflict is now history as Liberians have resolved to travel on a path of unity and development;

INTRODUCTION In 2006, the First Female in African to be elected President, was inaugurated in Liberia; President Elen Johnson Sirleaf graduated from Harvard University, with long years of experience working in the UN System, Citibank and other international organizations.

INTRODUCTION Since her election, tremendous progress has been made in the areas of good governance, establishment of the rule of law, gradual economic growth security sector reform and improvements in international relations.

INTRODUCTION Early this year, President Ellen Johnson Sirleaf visited the USA

Reciprocal visit of President George Bush to Liberia The recent visit of US President George Bush to Liberia

Overview of Petroleum Prospects Liberia is a frontier area; no oil is being produced Studies have shown that Potential is in offshore areas

Overview of Petroleum Prospects Exploration work conducted intermittently between the 1960’s and 1980’s were in shallow waters. Only seven (7) wells were drilled during this period. Although no oil was found, oil shows were found in some of the wells.

Overview of Petroleum Prospects Finds in the deep water areas of the Gulf of Guinea and other places along the African Coast give Liberia course for optimism for its deep water prospects

Overview of Petroleum Prospects TGS NOPEC was commissioned and in 2000 it shot a total of approximately 9,383 km of 2D seismic lines.

Overview of Petroleum Prospects Seventeen (17) blocks were delineated, running from the continental shelf into deep waters

Block/Acreage Holdings The first Bid round resulted in the following Block holdings: Repsol Exploracion: LB -17, LB-16 Woodside Energy: LB-15 Oranto Petroleum: LB-11, LB-12 Regal/European Hydrocarbon: LB-8, LB-9 Broadway Consolidated PLC: LB-13

Block/Acreage Holdings The Broadway and Oranto PSCs have been completed and ratified by the National Legislature; These 2 companies are now planning the execution of 3D Seismic surveys. The PSCs for Repsol, Woodside and Regal/European Hydrocarbons have been completed and are presently undergoing the ratification process at the National Legislature  

Legal and Regulatory Framework The Petroleum PSCs reflect the following : 2002 Petroleum Act The 2000 Revenue Code The Environmental Protection and Management Law The Investment Incentive Code

Legal and Regulatory Framework The Petroleum PSCs reflect the following : Because Liberia is a frontier area, many considerations and incentives are given during the PSC negotiation;

Terms in Typical Negotiated PSC Duration of exploration: 8 Years First Period: 4 Years Second Period: 2 Years Third Period: 2 years

Exploration Work Commitments First period: 3D Seismic Survey Drilling of 1 Exploratory Well Second Period: Third Period:

First Period: US$8m Second Period: US$10m Third Period: US$10m Minimum Expenditure First Period: US$8m Second Period: US$10m Third Period: US$10m

Environmental Management Program EIA required prior to commencement of exploration and production Recovery of production costs and profit Oil split Cost recovery: 70%

Sample Profit Oil Split Total Production (Barrels per Day) Government Share Contractor’s 0 – 100,000 40% 60% 100,000 to 150,000 50% Over 150,000

Income tax Rate: reduced from 35% to 30% Taxation Income tax Rate: reduced from 35% to 30% Signature Bonus: Nil

Production Bonuses are Negotiable Sample Production Bonus: When total production reaches 30,000 bbl/day = US$2m 50,000 bbl/day = US$3m 100,000 bbl/day = US$5m

Applicable Contributions Include Contribution to Hydrocarbon Development Fund Annual Contribution to training estimated as follows: US$100,000: During exploration US$200,000: During production US$75,000: To University to Liberia

Annual Social Welfare Contribution Estimated to be as follows: US$150,000: During exploration US$250,000: During production

SECOND BID ROUND EXTENSION THE GOVERNMENT OF LIBERIA HAS MADE AN EXTENTION OF THE BID ROUND CLOSING PERIOD BY ONE MONTH THE NEW DATE IS JULY 1, 2008 AT 12:00 O’CLOCK NOON

CONCLUSION The results of exploration to date indicate a very promising future for hydrocarbon exploration in Liberia, Oil Prone Petroleum to Mixed Oil & Gas Prone Systems occur in the offshore Liberia Basins, Security Conditions for Long Term investments are excellent and long term stability is assured. NOCAL’s PSC terms meet the objectives of both the Contractor & Government with a “WIN-WIN” result.

Contact: www.nocal-lr.com END I THANK YOU! Contact: www.nocal-lr.com