Chevron Corp. (CVX) said Wednesday it will explore for oil off the shore of Liberia--a nation that doesn't yet produce crude, but holds promising acreage in a region that has yielded rich new oil deposits.
Chevron Corp. (CVX) said Wednesday it will explore for oil off the shore of Liberia --a nation that doesn't yet produce crude, but holds promising acreage in a region that has yielded rich new oil deposits.

The San Ramon, Calif., company signed up for three giant deep-water blocks covering a combined area of 3,700 square miles--an area nearly four times the size of Rhode Island and bigger than what Chevron holds off the shore of oil-rich Angola. Chevron will hold a 70% interest in the concessions, and will conduct a three-year exploration program. The program will begin in the fourth quarter of 2010.

Chevron's foray is the latest in an emerging oil region in West Africa , where giant fields such as Tullow Oil PLC's (TLW.LN) Jubilee and Anadarko Petroleum Corp.'s (APC) Venus have been found. It is also the first time that a giant integrated oil company has gotten involved in the West African country, which is still healing from long years of strife. The discovery of oil would greatly boost the recovery of the agrarian nation, one of the world's poorest, and propel it into the ranks of budding African oil powers like Ghana and Uganda .

"It represents an expression of confidence in the leadership and future of Liberia which are essential conditions to attract other major investors in all sectors of the economy," Liberian President Ellen Johnson Sirleaf told Dow Jones Newswires in an email. "The creation of jobs and the revenue of possible oil finds will transform the economy through infrastructure development."

For Chevron , Liberia is a rare find: a country that's still open to foreign investment in its natural resources that could be home to significant quantities of crude. The fact that the country isn't an oil producer yet creates attractive conditions for investment.

"Terms and conditions in Liberia are in line with most of the countries that are encouraging foreign investment," said Ali Moshiri, Chevron's head for Africa and Latin America .

"They're very pragmatic about their approach," Moshiri said about the Liberian government in an interview with Dow Jones Newswires. "That's the reason we're here."

Also, as major oil companies scour the globe competing with Asian companies to find the last few giant reservoirs of crude, finding a play of "this size and this magnitude" is becoming less and less common, Moshiri said.

Moshiri said that the first well is scheduled to be drilled next year, and that the company could base some of its operations out of neighboring countries. Chevron has a large presence in Africa , and is a major oil producer in Angola and Nigeria .

Liberia , with a population of 3.4 million, mainly depends on exports of rubber and timber to make ends meet. It is still healing from the civil war that ended in the earlier part of the decade, but its recovery has been quickening its recent years. Last weekend, Delta Air Lines Inc. (DAL) launched the first direct flight between the U.S. and Liberia in many decades.

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