Cross-Border Unitization and Joint Development Agreements: An International Law Perspective

By Bastida, Ana E.; Ifesi-Okoye, Adaeze et al. | Houston Journal of International Law, Winter 2007 | Go to article overview

Cross-Border Unitization and Joint Development Agreements: An International Law Perspective


Bastida, Ana E., Ifesi-Okoye, Adaeze, Mahmud, Salim, Ross, James, Walde, Thomas, Houston Journal of International Law


  I. BASIC CONCEPTS
     A. Sources of International Law
     B. Sovereignty, Territory, and Boundaries

 II. DELIMITATION OF INTERNATIONAL MARITIME
     BOUNDARIES

     A. Delimitation of the Continental Shelf
     B. Delimitation of the Exclusive Economic Zone
     C. The Concept of Cross-Border Unitization
     D. The Concept of Joint Petroleum Development
        Agreements
     E. Rules Applicable to Develop Common Deposits

III. IS THERE AN OBLIGATION TO COOPERATE UNDER

     CUSTOMARY INTERNATIONAL LAW?

     A. International Case Law
        1. The North Sea Continental Shelf Cases

        2. The Iceland/Norway Conciliation
           Recommendations on the Continental Shelf
           Area Between Iceland and Jan Mayen Island
        3. The U.K./France Arbitration
        4. The Greece/Turkey Aegean Sea Continental
           Shelf Case
        5. The Tunisia/Libya Continental Shelf Case
        6. The Australia/Indonesia Seabed Case
        7. The Eritrea v. Yemen Tribunal Phase II
           Decision

     B. International Treaties and Agreements

        1. Cross-Border Unitization Agreements
        2. Unitization Treaties
           a. Agreements in the North Sea
               i. Frigg Agreement, 1976
              ii. Statfjord Agreement, 1979
             iii. Unitization of the Sunrise and
                  Troubadour Fields, 2003
              iv. Other Offshore Cross-Border
                  Unitizations
           b. Interlicensee Unitization Agreements

        3. Joint Development Agreements
           a. Japan-South Korea Agreement, 1974
           b. Sudan-Saudi Arabia, 1974
           c. Thailand-Malaysia, 1979/1990
           d. Tunisia-Libya, 1988
           e. Timor Gap Treaty (Australia-Indonesia),
              1989
           f. Guinea-Bissau-Senegal, 1993/1995
           g. Argentina-U.K. Joint Declaration, 1995
           h. Timor Sea Treaty (Australia-East Timor),
              2001
           i. Nigeria-Sao Tome e Principe, 2001

     C. General Structure of Agreements

        1. Sharing of Resources
        2. Management
        3. Applicable Law
        4. Operator/Position of Contractors
        5. Financial Provisions
        6. Dispute Resolution

IV. SUMMARY AND CONCLUSIONS

An understanding of the framework of the governing laws, regulations, model contracts, and existing agreements within the survey states as set forth in the earlier sections of this Article, as well as the practical advice in Section 5 of this Article, provides the international oil and gas practitioner with the necessary tools to negotiate a unitization agreement. However, when a reservoir straddles the boundary between two sovereign states, the complexities of any proposed unitization increases.

Petroleum deposits often extend across national boundaries in such a manner that "either portion can be exploited, wholly or in part, from the other side of the line." (1) Transboundary oil and gas deposits "do not conform to property lines, licensing demarcations, or political boundaries. (2)

The exploitation of those deposits in a joint, coordinated operation by respecting the common nature of petroleum reservoirs regardless of the boundaries they cross would seem to be the ideal strategy to undertake their development from a technical, conservationist, and environmental perspective. From a legal perspective, however, the development of common deposits straddling international boundaries raises complex and far-reaching issues. Under application of the fundamental principle that the territorial sovereignty or exclusive sovereign rights of states do not extend beyond their border, each state exercises exclusive authority over its own territory, and any infringement across an international boundary constitutes a violation of another state's territorial sovereignty or "exclusive sovereign rights." (3) Since the development of deposits straddling international boundaries involves two or more sovereign states, it will be subject to different legal regimes and, consequently, different terms and conditions for exploration, exploitation, and transportation of oil and gas. …

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