Academic journal article Houston Journal of International Law

The 2012 Agreement on the Exploitation of Transboundary Hydrocarbon Resources in the Gulf of Mexico: Confirmation of the Rule or Emergence of a New Practice?

Academic journal article Houston Journal of International Law

The 2012 Agreement on the Exploitation of Transboundary Hydrocarbon Resources in the Gulf of Mexico: Confirmation of the Rule or Emergence of a New Practice?

Article excerpt

   I. ABSTRACT   II. INTRODUCTION  III. TRANSBOUNDARY HYDROCARBON DEVELOPMENT       UNDER INTERNATIONAL LAW       A. Sources of Law Governing Transboundary          Deposits       B. Third United Nations Convention on the Law of          the Sea (UNCLOS) and the Obligation to          Cooperate in Developing Transboundary          Hydrocarbon Resources       C. International Customary Law, Judicial Decisions          and Expert Opinions       D. State Practice: Agreements Used to Coordinate          Development of Transboundary Reservoirs   IV. U.S. AND MEXICO BILATERAL PRACTICE ON       TRANSBOUNDARY RESOURCES    V. DEVELOPMENT OF BOUNDARY TREATIES IN THE GULF OF MEXICO       A. The Treaty of 1978       B. The 2000 Treaty   VI. 2012 TRANSBOUNDARY AGREEMENT AND ITS       IMPLICATIONS UNDER INTERNATIONAL LAW       A. Ratification Process       B. Preamble and the Guiding Principles of the 2012          Transboundary Agreement       C. Reporting Requirements and Information          Sharing       D. Determining the Existence and Allocation of a          Transboundary Reservoir       E. Unitization       F. Fiscal Regime       G. Cooperation and Facilitating Access to Facilities       H. Dispute Resolution       I. Texas Border       J. Inspections       K. Safety and Environmental Protection       L. Termination  VII. IMPLICATIONS OF INTERNATIONAL LAW ON THE       IMPLEMENTATION OF THE 2012 TRANSBOUNDARY       AGREEMENT       A. The 2012 Transboundary Agreement Unitization          Process       B. When a Unitization Agreement Cannot Be          Reached Does International Law Restrict the          Ability of the Parties to Still Exploit the          Transboundary Resource?       C. Is the 2012 Transboundary Agreement          Inconsistency with International Law? VIII. CONCLUSION 

I. ABSTRACT

This Article explores the international law applicable to the exploitation of hydrocarbon resources that straddle the boundaries between states (transboundary fields) and its applicability to the U.S. and Mexico maritime boundary in the Gulf of Mexico. After a detailed examination of the different sources of international law including treaties, customary norms, judicial decisions, and bilateral practice, the Article concludes that the United states and Mexico have deviated in some regards from the standard international legal practices that other states have adopted to exploit transboundary hydrocarbon resources. The two most notable deviations are in allowing either nation to unilaterally exploit the shared resource, if no unitization agreement can be achieved, and the absence of an effective third party dispute settlement mechanism under some circumstances. Concretely, the Article analyzes how the latest instrument signed by these two nations for the exploitation of these resources, the 2012 Agreement on the Exploitation of Transboundary Hydrocarbon Resources, modifies international practice in several aspects and has the potential of complicating the efficient exploitation of the resources for the benefit of both nations. In reaching its conclusion the Article reviews the ratification processes of the agreement, the legal implications on the way both states perceive the use of these resources, and the effects that the 2014 reform in the energy sector in Mexico has on the binational treaty regime. (1)

II. INTRODUCTION

The United States and Mexico have exploited hydrocarbon resources from their respective offshore areas of the Gulf of Mexico (GOM) for many decades. Nevertheless, this has been done in a diametrically opposite way due to the legal frameworks surrounding the development of the hydrocarbons industry on both sides of the border. It would be difficult to find two bordering nations that have had such contrasting energy industries and regulatory cultures. Market diversity and global competition is the distinguishing feature of the U.S. model, while the Mexican model for more that seventy-six years rested on an opposing principle: the monopoly of the State-owned company Petroleos Mexicanos (PEMEX). …

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