By Mohamed Jaward Nyallay
Sierra Leone has taken a step closer to restarting oil exploration after it announced that is had awarded offshore petroleum acreage license to two companies - Cluff Energy Africa and Innoson Oil and Gas.
A statement from the Office of the President on the 29th of April, announced that 24 blocks had been distributed between the two companies.
Cluff, a United Kingdom based energy company got 15 of the 24 blocks. All the oil blocks are on the northern side of Sierra Leone’s coast which is close to Guinea.
Innoson, a Nigerian based company, got license for 9 blocks which are all situated towards the south side of the coast, closer to Liberia.
The two companies were among six companies that submitted applications for the license process.
The announcement by the government brings to an end almost two years long license application process.
Managing Directorate at the Petroleum Directorate, Timothy Kabba, told Politico that they had to set up a “Transparent Evaluation Committee” which consisted of stakeholders like the Ministry of Justice, Local Content Agency and the Environment Protection Agency to evaluate the applications.
Sierra Leone’s oil industry has a short and an unproductive history, with the country yet to benefit fully from the commercial value linked to past exploration in its waters.
The awarding of these licenses comes with high hopes as the country seeks to diversify its economy which is currently mainly reliant on mining and agriculture.
Kabba said it is early to predict the commercial value oil exploration will bring to the country’s economy, noting that the awarding of the licenses is the beginning of a “long journey.”
“We are going to negotiate the biddable terms. It is a long journey, so I cannot tell you exactly the number of jobs it is going to create or the economic impact it is going to have. This is the first step of a long journey of a very auspicious and prosperous future,” he said, adding that the economic benefit could be huge once exploration starts proper.
“The economic impact of this is such that these companies have financial obligation to the state. Therefore they will pay those resources to the national treasury,” Kabba said.
The two companies which won the license have not operated in the country before. Cluff are operating in neighboring Liberia and oil rich Angola.
Innoson opened its oil and gas branch in 2019.
Drilling might not start anytime soon because of further negotiations on many more aspects of their work and the ongoing covid-19 pandemic.
In a country where the GDP has been projected to contract from 5.1% to 3.8% in the current financial year, the start of oil exploration will be significant for the recovery of the country’s economy.
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