Chevron, the US energy company, will carry out oil exploration off the Liberian coast later this year, giving the west African country the possible chance to join its neighbours as an oil-producing nation.
The countries that span the west African coast pump more than 3 million barrels of oil per day from the likes of Nigeria, Angola and new producer, Ghana. Chevron will now look to invest ‘billions of dollars’ in Liberia if the search for commercially viable oil is successful, according to Karl Cottrell, Liberian country manager for the Californian company.
Chevron signed a three-year exploratory deal with Liberia last year and will begin work in the final quarter of 2011. “We have a rig that will be entering Liberian waters shortly, and we expect to drill the first well later this year, with more to follow” said John Watson, the CEO of Chevron during a visit to the Liberian capital last week. “We are optimistic that we will be successful in our exploration program.”
The plans will involve exploring three deep-water blocks that cover an area of 3,700 square miles. If oil is discovered, it could take eight to 10 years before production begins. Chevron also operates in Angola, Chad, the Democratic Republic of Congo and Nigeria.
Africa’s oil-production capacity is anticipated to reach 7.4 million barrels a day by 2014 and the western coastline has become a key investment destination. The Cretaceous trend, a 1,000km long geological feature, spans the coastlines of Ghana, Liberia, Sierra Leone and Cote d’Ivoire. The area is one of the world’s most promising areas for oil exploration and Washington estimates that the region will satisfy a quarter of US oil demand by 2015. Ghana became an oil producing nation last year following the discovery of the Jubilee field.
Having emerged from civil war in 2003, possible oil investment should aid Liberia’s recovery, but the experiences of its neighbours suggests otherwise. Chevron have already established a $10.5 million social investment programme which they claim will improve the lives of Liberians in health, education and economic development.
President Ellen Johnson-Sirleaf told the FT last year that she hoped Liberia would avoid the ‘oil-curse’ by maintaining a diversified economy. Liberia’s main industries include iron ore mining and and palm plantations.