By Allieu Sahid Tunkara
Sierra Leone has reopened access to oil and gas exploration following the publication of direct and open tender processes this month. The tender notice calls for applications from competent companies for exploration license.
Timothy Kabba, Director General of the Petroleum Directorate, said as part of their criteria a license application must cover an area equivalent to at least three blocks. The size of each block amounts to 1,360km.
Although no minimum work program specifications for the initial exploration period has been set, the director said that companies are expected to invest in studies, data and other activities that gear toward the drilling of exploration wells.
Kabba said this is the fourth licensing round and five blocks for exploration have been identified. The reopening of bidding comes after six months of consultation with oil companies and other stakeholders in the sector. Tender processes for open tender and direct tender will last for four and six months respectively.
Open tender bids will be giving to companies who intend to focus on shallow water depth, while the direct tender bid deals with companies that want to do deep water level exploration.
The Petroleum Directorate say potential exploration companies must prequalify for the tendering processes after fulfilling the financial, technical and other requirements. It noted that under the scheme, applicants are invited to delineate their areas of interest.
“The exploration will cover 402 kilometers and 2.500 meters deep in spite of global politics and economics, market and regulatory challenges,” Kabba stated.
“We will strive very hard to meet the benchmarks set by government,” he stressed.
The reopening of the country to oil and gas exploration has come in the face of temporary suspension of exploration rights of mining companies by the Petroleum Directorate in September 2018. Some exploration contracts entered into by some companies with the former government have been cancelled as the petroleum directorate said “they are not in the interest of the country.”
Having reviewed mining contracts, the petroleum directorate is of the view that conditions offered in the original tendering processes are less protective of investor interest. This situation prompted government to open the entire Sierra Leone offshore to exploration by competent companies. This is a hybrid tendering process that will enable the directorate to match the skills and finance capacity of investors to the challenges and opportunities of each exploration type. No definite timeline as to how long exploration process would last was offered by the directorate.
Effort to revamp the oil sector has raised questions of sustainability as some companies, over the years, have abandoned oil exploration for unexplained reason. Sierra Leone relies heavily on mining and there has been questions surrounding the sustainability of this new found wealth.
The protection of the environment in line with established rules figured in the director’s statements. He said he had learned a lesson in which the extractive industries damage the environment and cause poverty among their areas of operation.
“The oil and gas industry is not a partisan enterprise. It is meant to meet the interest of every Sierra Leonean and it is not only a business of geoscientists,” he added.
The Petroleum directorate says it is confident about the economic prosperity that oil would offer to Sierra Leone, making reference to countries in Asia which have transformed their economies with oil wealth.
Oil exploration in Sierra Leone will pave a way for economic diversification in the country. Sierra Leone still depends heavily on the mining sector and recent challenges with iron ore prices have had its effect on the economy.
© 2019 Politico Online
