The Issue of Exploration and Exploitation of Hydrocarbons in Undelimited Maritime Areas
Updated: Oct 17, 2021
Joint Exploration/Exploitation in Undelimited Maritime Areas and the Permissibility of Unilateral Exploration/Exploitation
The increasing demand for energy resources, economic development, and the advance of drilling related technology has led maritime delimitation to become one of the most crucial issues of both bilateral relations and international jurisprudence. However, the vagueness of the ‘equitable solution’ principle, embodied in Articles 74 and 83 of the LOS Convention, complicated the conclusion of maritime delimitation agreements between States. As a corollary, significant maritime areas remain undelimited today. The term ‘undelimited’ refers to those maritime areas “where the continental shelves of the States overlap or may potentially overlap, and no final delimitation is in place.” In this blog post, I will mainly focus on two issues. First, whether international law entails an obligation for joint exploration/exploitation of hydrocarbon resources in undelimited continental shelves, and second, whether States are legally permitted to unilaterally explore or exploit the deposits situated in undelimited maritime areas.
a) Joint Exploration/Exploitation in Undelimited Continental Shelves
To begin with, there is no provision in the Law of the Sea Convention that explicitly requests States to jointly explore or exploit the natural resources in areas where they have overlapping claims. However, Article 83(3) -which has no Geneva Convention counterpart - includes a positive obligation, which calls States “in a spirit of understanding and cooperation . . . to make every effort to enter into provisional arrangements of a practical nature . . .” The issue that arises is whether joint exploration/exploitation would amount to provisional arrangements. It is true that the Convention does not specify the kinds/types of those arrangements. Their content is to be specified by the parties, which are completely free to choose an arrangement from complete moratorium to joint exploration and/or exploitation. Therefore, Joint Development Agreements (JDAs) can be considered only one of the many possible solutions regarding the exploration/exploitation of resources in undelimited areas. However, jurisprudence indicates that the first obligation of Article 83(3) seeks to promote the “equitable and efficient utilization of the resources.” Furthermore, in North Sea case, the ICJ had endorsed joint exploitation as an appropriate measure in order to preserve the unity of a deposit in an area with overlapping claims. Nevertheless, the phrase “shall make every effort” which is included in Article 83(3) constitutes an obligation of conduct, and not of result. The idea behind this perception is that if the drafters intended to create a provision requesting States to conclude provisional arrangements, they should then have excluded the reference to ‘effort’ and they would have written “…States shall enter into provisional arrangements.” This view was also endorsed by ITLOS, which claimed that the language used in Article 83(3) does not request States to reach an agreement on provisional arrangements.
Furthermore, the phrase ‘in a spirit of understanding and cooperation’ of Article 83 was linked with the concept of good faith, which in other parts of the Convention is paraphrased as an obligation to cooperate. Therefore, States do have the obligation to enter into negotiations for provisional arrangements -a type of which is a JDA. It goes without saying that there is no reason to enter into negotiations in bad faith. Therefore, those negotiations should indeed be meaningful and conducted in good faith. However, it is clear that the obligation of negotiation does not translate to an obligation to reach an agreement. As a result, States that refuse to negotiate provisional arrangements in good faith may violate Article 83(3), which would in turn, trigger State Responsibility. Yet, in no way are these States obliged by conventional international law to conclude an agreement, let alone a JDA.
Turning now to customary international law (CIL), neither is it generally accepted that States are required to jointly explore, nor to exploit the resources lying in areas with overlapping claims. CIL consists of two elements, namely State practice and opinio juris. State practice reveals that over the years an increasing number of JDAs have been concluded in various parts of the world, including Asia-Pacific, the North Sea, and the Middle East. Given the number of extant JDAs, as well as the fact that they cover a diverse geographical area, their conclusion cannot be considered coincidental. Nevertheless, it cannot be denied that there is great disparity among JDAs, and no type predominates the other, at least in numerical terms. Another issue worth pointing out is that although some JDAs concern cooperation over common deposits in delimited areas, others focus on joint development of resources in undelimited continental shelves. Despite widespread bilateral JDAs, State practice does not appear to be constant or uniform. In any case, and apart from State practice, a customary rule has not been established due to the lack of opinio juris on this matter. The language used in JDAs and the rhetoric of States do not indicate that States conclude these agreements based on their belief in the existence of an obligation for joint exploration/exploitation. Ong insists that the lack of a customary rule does not translate to a “legal void” on the matter because in any case there is a general principle to cooperate regarding natural resources. Yet, as was shown in the analysis of the treaty provision above, this procedural rule for cooperation is distinct from a requirement for joint development. Others refer to an emerging customary rule, or at least a regional customary international law in specific areas. In my view, any discussion of an obligation for joint exploration/exploitation has no basis in either conventional or customary international law. The rights that States enjoy in the continental shelf are inherent and exclusive. With the exception of States having decided that a JDA is the best solution for their bilateral relations in a particular circumstance, the notion of permanent sovereignty of natural resources (PSNR) cannot easily coexist with an obligation to jointly explore/exploit. Yet, in any case, the decision to jointly explore/exploit through the conclusion of a JDA would be based on the application of the notion of consent, which is the foundation of international law.
b) Unilateralism and Exploration/Exploitation
Apart from the incentive obligation, Article 83(3) includes also a preventive one. In particular, its second part calls states, “in a spirit of understanding and cooperation not to jeopardize or hamper the reaching of the final agreement.” Therefore Article 83(3) imposes an obligation of mutual restraint in order to prevent States’ involvement in activities that may aggravate a dispute. Although the drafters did not intend to impose a complete moratorium in undelimited areas, this provision does not clarify or enumerate any acts that could fall under this prohibition. However, it has been accepted that this provision relates to whether unilateral activities regarding the exploration or exploitation of resources are permitted. Case-law has been particularly enlightening on this matter. In brief, jurisprudence has mainly focused on whether the activities cause permanent changes or not.
In the Aegean Sea case, the ICJ rejected the Greek request for provisional measures and the suspension of all Turkish exploratory activities on the basis that those activities did not entail any risk of physical damage to the seabed or the subsoil, or to their natural resources. Moreover, no installations were established in the continental shelf, while the Turkish activities did not involve the actual apportionment of the natural resources according to the Court. Therefore, the Order implied that seismic surveys of transitory nature were permitted.
This distinction between activities that cause physical damage to the marine environment (e.g. drilling), and those that do not, such as the seismic exploration, was repeated in the Guyana/Suriname arbitration, where the Tribunal considered as impermissible any unilateral activities that permanently affect the rights of the parties. Therefore, those activities would violate the second obligation of Article 83(3) (i.e. ‘not to jeopardize’). Logchem rightly considers the Tribunal’s reasoning for the permissible unilateral activities problematic due to the inconsistent terminology (“physical change”, “permanent physical change”, “physical damage”, etc). He claims that the permissible unilateral activities vary according to the use of the language. For example, ‘physical change to the marine environment’ is much broader compared to ‘permanent physical change.’ Moreover, I cannot help but agree with Yiallourides who challenges the permissibility of seismic surveys/exploration, while at the same time acknowledging that, on the basis that both States (i.e. Guyana and Suriname) had over the years been involved in exploratory activities, it was more than logical that the Tribunal would find those activities permissible. He however draws a distinction between the seismic surveys in Guyana/Suriname and those conducted by Turkey in the Aegean Sea because the latter did in fact aggravate the dispute and made the reaching of an agreement much more difficult. As a result, those surveys had violated the obligation embodied in Article 83(3).
Turning now to a more recent case - Ghana/Ivory Coast- although ITLOS accepted some of the findings of the previous cases, it also took a different approach. It is the view of the present author that the Ghana/Cote d’Ivoire case entails some ‘dangerous’ findings. In particular, it reaffirmed the distinction between activities with a permanent change and those without, and accepted that activities causing permanent modification (i.e. drilling) cannot be fully compensated because the “status quo ante” of the subsoil and seabed cannot be restored. Moreover, although it asked Ghana not to conduct new drillings in the area, it avoided requesting a suspension of the ongoing drillings based on increased financial loss, as well as the danger that the marine environment would face due to the deterioration of equipment. Even though I believe that an argument focusing on the protection of the marine environment could be crucial given the importance that the Convention poses for its protection at least in regard to the EEZ in Article 56, I do not agree with the reasoning regarding financial loss. It underestimates that the sovereign rights attached to the seabed/subsoil are both inherent and exclusive and that they would hierarchically be positioned under the notion of sovereignty. The latter is a fundamental principle in international law. Therefore, following the ITLOS judgment, one may imply that the financial burden for Ghana is more important that Ivorian sovereign rights. The Tribunal finally upheld that Ghana had not violated the obligation of Article 83(3) which called States not to jeopardize the reaching of an agreement. This decision was challenged by Judge Paik. I consider the Tribunal’s judgment on this matter particularly dangerous. By implying that drilling activities under specific circumstances may be permissible, the Tribunal’s judgment may lead more States to engage in unilateral exploitation. The idea behind this is that if the case were to be examined before the Court when drillings were in an advanced stage, then the Court may not find the State responsible for a violation of Article 83(3). Moreover, Judge Paik expressed a very interesting view -which, in my opinion, should have been more clearly elaborated even in the Aegean Sea case. He mentioned that even activities that do not reach the threshold of a permanent physical change could cause tension between States, and thus they could jeopardize the reaching of an agreement. He rightly insisted that when assessing whether a unilateral activity violates Article 83(3) -- and thus whether it is permissible or not -- depends on the particular circumstances, and various factors should be taken into account, including “the type, nature, location and times of acts as well as the manner’’ in which they were carried out.” Therefore, he leaves space for denouncing some exploratory activities as impermissible.
Lastly, the Somalia/Kenya case -for which the judgment was delivered in October 2021- reveals that International Courts and Tribunals (ICTs) seem to be consistent in their decision to differentiate the situations where a State conducts seismic surveys from those where States conduct drillings. The ICJ accepted once more that surveys cannot lead to a permanent physical change in the marine environment and therefore, do not jeopardize the reaching of an agreement, in contrast with drillings, which may alter the status quo. Kenya insisted that Somalia’s persistence to interpret the obligation of Article 83(3) broadly, and to consider all activities as a violation by Kenya of its obligations towards the LOS Convention, shows that Somalia failed to ‘follow’ ICTs prior reasoning. Undoubtedly, compared to previous cases, the Somalia/Kenya case did not offer any innovative finding regarding the exploration or exploitation of hydrocarbons in disputed areas.
International law does not impose any obligation for joint exploration or exploitation of hydrocarbons in areas that are not yet delimited. Undoubtedly, a cooperative approach on the exploration and exploitation of resources would entail serious advantages for coastal states. Nevertheless, this does not mean that the conclusion of JDAs is an easy solution. The reason being that their conclusion requires the political will and a certain level of trust between neighboring States, which in certain cases is difficult achieve due to the existence of opposing State interests. Regarding permissible unilateral activities, it has been accepted that activities that do not cause a permanent change to the marine environment, such as seismic surveys/exploration are permitted, whereas drilling, which would change the seabed and subsoil permanently, is prohibited. However, we should not underestimate that depending on the circumstances, exploratory activities may also jeopardize the reaching of an agreement under Article 83(3), and therefore, they may be impermissible. In consequence, it is the view of the present author that in the case of unilateral activities, a general rule on their permissibility cannot be established, and each case should be assessed on its own merits.
Works Cited:  British Institute of International and Comparative Law (BIICL), “Report on the Obligations of States under Articles 74(3)/83(3) of UNCLOS in respect of Undelimited Maritime Areas,” (2016), p. 1.  Lagoni, “Interim Measures Pending Maritime Delimitation Agreements,” American Journal of International Law 78 (1984), pp. 360-362.  Award in the Arbitration regarding the Delimitation of the Maritime Boundary between Guyana and Suriname, Award of 17 September 2007, RIAA, vol. XXX, p. 130, para. 460.  North Sea Continental Shelf Cases (Federal Republic of Germany/Denmark; Federal Republic of Germany v. Netherlands), Judgment, ICJ Reports 1969, p.52-53, para. 99, 101.  BIICL, (2016), para.47.  Dispute Concerning Delimitation of the Maritime Boundary between Ghana and Côte d'Ivoire in the Atlantic Ocean (Ghana/Côte d'Ivoire), Judgment of 23 September 2017, Case No.23, p. 170, para. 627.  Lagoni, (1984), p. 355.  Lagoni, (1984), p. 356.  David Ong, “Joint Development of Common Offshore Oil and Gas Deposits: ‘Mere’ State Practice or Customary International Law?” American Journal of International Law 93 (1999), pp. 787-788, footnotes 139-140.  Ibid, p. 788.  Ibid.  Beckmam & Bernard, “Framework for the Joint Development of Hydrocarbon Resources,” Working Paper, (2019), CIL/NUS, p. 12.  Yiallourides Constantinos, “Joint Development of Seabed Resources in Areas of Overlapping Maritime Claims: An Analysis of Precedents in State Practice,” USF Maritime Law Journal 31(2) (2018), p. 154.  Ong, (1999), p.792.  P. Cameron, “The Rules of Engagement: Developing Cross-Border Petroleum Deposits in the North Sea and the Caribbean,” International & Comparative Law Quarterly 55 (2006), p.564.  Lagoni, (1984), p. 367.  Ong, (1999), p. 804.  Cameron, (2006), p. 562.  Lagoni, (1984), p. 366.  Award in the Arbitration regarding the Delimitation of the Maritime Boundary between Guyana and Suriname, Award of 17 September 2007, RIAA, vol. XXX, p.131, para. 465.  Aegean Sea Continental Shelf (Greece v Turkey), Interim Protection, Order of 11 September 1976, I.C.J. Reports 1976, p.10, para. 30.  Ibid.  Guyana/Suriname, (2007), p.132, para. 467.  Ibid, p.133, para. 470.  Logchem Van Youri, “The Scope for Unilateralism in Disputed Maritime Areas,” in Schofield Clive, Lee Seokwoo, Kwon Moon-Sand (eds), The Limits of Maritime Jurisdiction, (BRILL-Martinus Nijhoff Publishers, 2014), p.183-184.  Ibid.  Yiallourides Constantinos, “Oil and Gas Development in Disputed Waters”, UCL Journal of Law and Jurisprudence 5(1) (2016), p.74.  Ibid, p. 75.  Dispute Concerning Delimitation of the Maritime Boundary between Ghana and Côte d'Ivoire in the Atlantic Ocean (Ghana/Côte d'Ivoire), Provisional Measures, Order 25 April 2015, ITLOS Reports 2015, p.163, paras.88-90.  Ibid, para. 99.  Dispute Concerning Delimitation of the Maritime Boundary between Ghana and Côte d'Ivoire in the Atlantic Ocean (Ghana/Côte d'Ivoire), Judgment 23 September 2017, Case No.23, p. 172, paras. 633-634.  Dispute Concerning Delimitation of the Maritime Boundary between Ghana and Côte d'Ivoire in the Atlantic Ocean (Ghana/Côte d'Ivoire), Separate Opinion, Judge Paik, 2017, p.6, paras. 16-17.  Ibid, p.3, para. 6.  Ibid, p. 3-4, paras. 6, 10.  Maritime Delimitation in the Indian Ocean (Somalia v. Kenya), Judgment 12 October 2021, ICJ Reports, p.74, paras.207-208.  Ibid, p.73, para.202.