By Urias Goll
In 2002, the government, under the leadership of President Charles Taylor, made a knee-jerk decision to accelerate an oil and gas program through the establishment of NOCAL and enactment of the New Petroleum Law 2002. Some who believe that the country was desperately in need to find additional funding sources to build up its revenue base for socio-economic development heralds this decision. I disagree because most, if not all, of the revenue generated in Liberia, were redirected to providing security and fill the pockets of the few elites against the wishes of the rest of the citizenry considered at the time as “riffraff”. The normal platitudes of “Conflict between President Taylor and the US government was due to his refusal to allow exploitation of our potential oil resources” show a lack of understanding of the fundamental of oil and gas development. President Taylor was caught up in the miasma of his own ruse, which is another story not required for this paper.
From a cursory reading, it’s easy to decipher that the “New Petroleum Law of 2002” as it is officially called, was prepared without consideration for some of the major issues confronting the oil and gas industry. For a start, the law glosses over pertinent issues as revenue management, institutional arrangement (to avoid conflict of roles), a strategic direction for local content, weaker proviso on environmental and social impacts mitigation and environmental liability, lack of commitment to transparency and accountability, etc. One can assume, that it wasn’t deliberate for the drafters of the law to omit these critical safeguards for the petroleum sector, but that the law was seemingly drafted in a hurry with the purpose of accelerating the oil and gas programs as a potential source of revenue for the government. Additionally, major issues such as nationwide consultation, critical reviews by experts, publication of drafts and redrafting, etc. were not included in the enactment process, least to speak about a robust legislative debate on the law.
From an environmental and biodiversity management perspective, the two laws- New Petroleum Law of 2002 and the New Petroleum Exploration and Production Reform Act 2016-are incomparable with the former being completely silent on critical issues underpinning environmental sustainability. One example is the absence of recognition of key environmental principles, which have been adopted within the industry such as “precautionary principle”, “polluter pays principle” and the environmental prevention principle. Indeed these principles are not included directly in the current Petroleum Act of 2016, however, it makes significant reference to the Environmental Management and Protection Law of Liberia (EPML) as the controlling legislation. The EPML places emphasis on these principles as significant to ensuring environmental management within the country. Interestingly, because the old petroleum law (2002) antedates the EPML, the framers, had they been cautious and strategic enough to understand the core issues confronting the industry, would have inserted these key principles as a guiding framework under which petroleum operations would have been conducted. A passive proviso such as “in accordance with the environmental laws of Liberia” as enshrined in the old law, while there existed no environmental legislation, is vague and creates ambiguity to be tussled with by legal experts. Does it mean the framers envisage that any environmental law established after the petroleum act (2002) would include these guiding principles?
Another key area where the current law is explicit compare to the old law is on environmental management plans, emergency preparedness including spill contingency and response. Arguably, no petroleum legislation will expressly provide details for emergency management and environmental management plan, notwithstanding, these environmental management systems/procedures are ubiquitous in the industry and for a legislation, expected to guide operations in frontier countries; to overtly be silent on these is untenable. The recently published petroleum Act provides the general requirement for environmental management plan and emergency preparedness during planning and drilling operations. The EPA and the Petroleum Regulatory Authority will subsequently contrive detailed requirements of these systems and procedures. This shows collective research and improvement from the old legislation.
Free Prior and Informed Consent (FPIC) is a major international requirement for use of resources depended largely upon by community members. Unequivocally, the constitution provides that all natural resources belong to the state. Albeit this proviso, petroleum exploration and production attracts misconceptions and has potential negative externalities toward the livelihoods and well being of communities. If not managed properly, it could lead to calamitous struggle. Both the 2002 and 2016 legislations are silent on FPIC but the new law of 2016 recognizes the importance of FPIC and mandates consultation during the preparation and approval of Environmental and Social Impact Assessment (ESIA). This is critical because the FPIC consultation process identifies key issues as perceived by the communities and assists the contractors to explain the raft of mitigation interventions designed to ameliorate the potential social and environmental impacts. With this, communities are informed about the project, while contractors gain a better understanding of the social and environmental considerations needed for the project. This promotes a better relationship between both parties and the contractors get to benefit from the acquisition of a social license.
A major improvement in the petroleum act 2016 is the requirement for an environmental audit of all petroleum operations. An Environmental audit is a standardized process for identifying weakness and deviation for a set of operating procedures that have existed in a system of compliance. It is mandated passively in the EPML but the process required and responsibility of parties for the audit is clearly defined in the current petroleum act 2016. This means that all exploration drilling operations (whether for 30-45 days or more) or production activities will be audited in accordance with the current act. It’s a big leap towards environmental sustainability and biodiversity management.
Finally, a single firm generally acquires license for petroleum exploration and production but many sub-contractors perform key operations under the license. In most instances, damage to the environment and property, as well as the destruction of key biodiversity areas and disruption to livelihoods, are traced to the negligence of the sub-contractors and not the ‘operator’ or main license holder. Under the previously law, there are no provisions about the liability of subcontractor in case of pollution. In fact, the liability of the contractor is vaguely enshrined in the old law of 2002. Realizing the increasing environmental, social and biodiversity risks of oil and gas operations, the current law of 2016 provides in Article 59.2 that “when the contractor is comprised of more than one legal entity, all legal entities are jointly and severally liable for pollution damage”. This is a strong and emphatic expression of the responsibilities of all entities involved in and connected to the operations of the petroleum license. It discourages laissez faire and ‘intentional negligent’ attitude on the part of the sub-contractors and protects the local environment, communities and biodiversity.
Arguably, the current law of 2016 may not be the best legislation for oil and gas development in Liberia, incontrovertibly, it’s a major improvement from old law of 2002 which was so far from the current realities of the sector to the extent that enforcement was a major challenge. It can be established by empirical evidence that the current law contains tighter environmental provisions and aspiration to uphold key environmental principles compare to the old law. Obviously, there are some key issues which could have been directly inserted into the law rather than left to international best practice but that’s a debate for subsequence paper.