Spike seen in African offshore disputes, oil companies watching

Africa maritime boundary disputes07 November 2014, Cape Town – 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.
*Wendell Roelf, Ed Stoddard & William Hardy – Reuters

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