The legal provisions about the exploration of hydrocarbons

in an exclusive economic zoneAthanasios Pitatzis

Leonidas EleftheriadisApostolis Kantartzis

Oil and Gas Law 08/12/2014MSc Oil and Gas Technology

Eastern Macedonia and Thrace Institute of TechnologySchool of Engineering Technology

Department of Petroleum & Natural Gas Technology

Continental shelf• The boundary of a continent is not its coastline, but the edge

of the continental shelf that lies under the ocean. Even though it is underwater, continental shelf is part of the continent and contains the sea-bed and subsoil of the submarine areas that extend beyond the territorial sea. Coastal nations have control of all resources on or under it, living or not, but no control over any living organisms above the shelf that are beyond its exclusive economic zone.

Exclusive economic zone• An exclusive economic zone (EEZ) is a sea-zone prescribed by the

United Nations Convention on the Law of the Sea (UNCLOS), over which a coastal state has sovereign rights to explore and exploit, conserve and manage its natural resources. It stretches from the seaward edge of the state's territorial sea out to 200 nautical miles (nm). When two (or more) state’s coastal baselines are less than 400 nm apart, overlap of EEZs occurs and it is up to the states to delineate the actual maritime boundary.• Territorial waters or territorial sea, as defined by the UNCLOS of 1982

(Art 3), is a belt of coastal waters extending at most 12 nm from the baseline of a coastal state. The territorial sea is regarded as the sovereign territory of the state.

Rights of the coastal State over the continental shelf• The coastal State exercises over the continental shelf sovereign rights for the

purpose of exploring it and exploiting its natural resources.• The rights referred to in paragraph 1 are exclusive in the sense that if the coastal

State does not explore the continental shelf or exploit its natural resources, no one may undertake these activities without the express consent of the coastal State.• The rights of the coastal State over the continental shelf do not depend on

occupation, effective or notional, or on any express proclamation.• The natural resources referred to in this Part consist of the mineral and other

non-living resources of the seabed and subsoil together with living organisms belonging to sedentary species, that is to say, organisms which, at the harvestable stage, either are immobile on or under the seabed or are unable to move except in constant physical contact with the seabed or the subsoil.

Article 87-Freedom of the high seas• The high seas are open to all States, whether coastal or land-locked. Freedom of the high seas is

exercised under the conditions laid down by this Convention and by other rules of international law. It comprises, inter alia, both for coastal and land-locked States:

1. freedom of navigation2. freedom of overflight3. freedom to lay submarine cables and pipelines, 4. freedom to construct artificial islands and other installations permitted under international

law, 5. freedom of fishing 6. freedom of scientific research • These freedoms shall be exercised by all States with due regard for the interests of other States in

their exercise of the freedom of the high seas, and also with due regard for the rights under this Convention with respect to activities in the Area.

Rights, jurisdiction and duties of the coastal State in the exclusive economic zoneIn the exclusive economic zone, the coastal State has jurisdiction :• the exploration, utilization and management of all natural resources,

the waters, the sea bed and the soil underneath the sea bed• the production of energy• the utilization of manmade islands, installations and structures• scientific research• the protection of the environment and• all rights and duties provided by the UN Convention.

Sea Around Us Project• The Sea Around Us Project (SAUP) is an international research group

based at the University of British Columbia Fisheries Centre that is devoted to studying the impacts of fisheries on the world's marine ecosystems. To achieve this, project staff have used a Geographic Information System (GIS) to map global fisheries catches from 1950 to the present, under explicit consideration of coral reefs, seamounts, estuaries and other critical habitats of fish, marine invertebrates, marine mammals and other components of marine biodiversity.

Exploitation of Offshore Trans boundary Oil and Gas Reservoirs

The United Nations Convention on the Law of the Sea (UNCLOS) provides a legal framework for maritime boundary delimitation and the exploitation of hydrocarbons in the contained areas.

BUT

What happens when the hydrocarbons reservoirs are located in between the boundary limits of two or more neighbouring states?

According to the international law exploitation of shared resources in disputed maritime areas is prohibited without the cooperation from all the states.

Even if a state has not signed to UNCLOS the same obligation exists under International Customary Law

There are two cases of transboundary Oil ans Gas reserves• A) The boundaries between the neighbouring countries are established

• Exploitation of hydrocarbons is defined in Cross Border Unitization AgreementsB) Deposits are found in a disputed territory

• Exploitation of hydrocarbons is defined in Joint Development Agreements (JDAs)

Both serve the same purpose, which is the agreement on the standards of the cooperation between the neighbouring countries.

The first question that comes up is:

• Who will guarantee the cooperation of the exploitation and development of the shared reserves?

• A unit operator for the reserves is appointed by agreement between the licensees of the two governments

It is as if the separate leases and licenses are merged into one single lease or license, with a single supervisor appointed to manage the development of the field

The free movement of persons and material, safety, inspections and other matters are also regulated in the JDA

The second question is:

• Which are the financial provisions? Do all states have the same financial rights on the reserves?

• Sharing of production and cost is usually agreed on a pre-negotiated formula and not on any geomorphologic basis

Equal sharing is the most common practiced measure

Variations do exist:

Timor Sea Treaty provides that upstream taxation of revenue from the JDZ is to be split between Australia Timor-Leste on a 90/10 basis

Under the Nigeria STP Treaty, Nigeria shares 60% of the resources and 40% goes to Sao Tome and Principe

What if there is after all a disagreement between the states involved?

• In most cases JDAs provide for an informal dispute resolution mechanism between parties

In other words the states usually agree on a arbitral committee to resolve their disputes

For example: Australia –Timor Leste treaty provides for dispute resolution by the Council of Ministers and if unresolved, to be resolved by an arbitral commitee of three arbitrators appointed by the states

If the dispute is still not resolved the states may therefore resort to thirds parties for expert advise

According to the CIA The World Fact book Albania:• territorial sea: 12 nm • continental shelf: 200 m depth or to the depth of exploitationItaly:• territorial sea: 12 nm • continental shelf: 200 m depth or to the depth of exploitationLibya:• territorial sea: 12 nm • note: Gulf of Sidra closing line - 32 degrees, 30 minutes north • exclusive fishing zone: 62 nm

Cyprus:• territorial sea: 12 nm • contiguous zone: 24 nm • continental shelf: 200 m depth or to the depth of exploitationEgypt:• territorial sea: 12 nm • contiguous zone: 24 nm • exclusive economic zone: 200 nm • continental shelf: 200 m depth or to the depth of exploitation

Turkey:• territorial sea: 6 nm in the Aegean Sea; 12 nm in Black Sea and in Mediterranean Sea • exclusive economic zone: in Black Sea only: to the maritime boundary agreed upon

with the former USSR

Greece• territorial sea: 12 nm • continental shelf: 200 m depth or to the depth of

exploitation

Why a State to declare Exclusive Economic Zone?• Production of Wind Energy • Offshore Installations• Scientific Research, such as seismic data for the detection of the

hydrocarbons and methane hydrate deposits• Fishing Industry • LNG Structure of Alexandoupoli • Protection of Marine Habitats and Ecosystem- Tourism Industry • Protection of the Enviroment

Protect Environment- Tourism Industry

Any Questions?