Spike seen in African offshore disputes, oil companies watching
Thu Nov 6, 2014 3:12pm GMT
* Maritime disputes seen on the rise amid Africa oil scramble
* Most African sea boundaries remain unclear
* Uncertainty could deter investment
By Wendell Roelf
CAPE TOWN, Nov 6 (Reuters) - African maritime boundary disputes are expected
to rise dramatically, potentially curbing exploration and creating
uncertainty in ownership over tens of billions of barrels of oil, industry
experts say.
A lack of maritime boundary agreements, which has not kept pace as more oil
companies moved offshore into deeper waters, has seen many African nations
struggling to enforce their sovereign rights under the 1982 Law of Sea
treaty.
In the past four months, two matters involving Kenya and Somalia and, more
recently, Ghana and Ivory Coast have been referred for arbitration, alarming
oil companies such as Tullow Oil who have been inadvertently caught in the
fallout.
"My hotspot at the moment is Africa," said Robert van de Poll, one of a
handful of global experts dealing with maritime boundary disputes under the
rules of procedure of the United Nations Convention of the Law of the Sea
(UNCLOS).
"Besides the two recent challenges, there are number of other areas which
are under review and will need resolution between the countries involved,"
he told Reuters at an African oil and gas conference organised by Global
Pacific & Partners.
Van de Poll told delegates of potential discord among African nations keen
to cash in as oil companies push into deeper waters.
With more than 13 million square kilometres of waters covered under the Law
of the Sea off Africa, Van de Poll said there were 100 maritime boundaries
covered, with 32 agreed and 68 still up in the air.
"These are the zones under discussion, and oil companies need to be aware
when buying blocks and should ask themselves: "Does the government own what
they are offering?," he said.
Van de Poll, who co-authored the preliminary African study with Galp
Energy's Head of Strategic Business Development, David Bishopp, used
declassified military information, satellite images and reviewed 83
sedimentary basins.
Preliminary figures from the African report showed that to date around 95
billion barrels of oil had already been discovered, with potential for
another 70-80 billion barrels as countries sought to extend their
continental shelf beyond the 200 mile economic exclusion zone.
SPIKE SEEN IN BORDER DISPUTES AND RESOLUTIONS
>From the Gulf of Guinea to the Horn of Africa and the Great Lakes Rift
valley, boundary disputes were threatening to flare up, making oil companies
cautious and governments bellicose.
"You are a seeing a spike in border issues and border resolutions which
never existed before," said NJ Ayuk, a Malabo-based lawyer for global law
firm Centurion LLP, which advises governments and oil firms.
In the Great Lakes area, where massive hydrocarbon finds in Lake Albert have
caused unease and exploration in Lake Malawi has led to tension between
Malawi and Tanzania, there were six areas of overlapping blocks noted that
did not fall under any treaties, according to Van de Poll.
Ayuk said there seemed to be more willingness from investors, states and
industry to try to resolve border issues.
"In the end the government needs resources, they need the revenue, they need
the investment, so sometimes it's better to share than lose it all," he
said.
The notion of a joint development areas was already working well in Africa,
said the chief executive of London-listed Ophir , who mentioned the
agreement between Guinea Bissau and Senegal as a successful example.
"It can delay investment in the areas that are contested, but there are some
tried and tested models for joint development areas in other parts of the
world which can be replicated in Africa, as long as people are economically
rational," Nick Cooper told Reuters. (Editing by Ed Stoddard and William
Hardy)