Cross-Border Unitisation of Petroleum Production Sharing Agreements: The Need for Adequate Social Stability Clauses
PRIME JOURNAL OF ADVANCED LEGAL STUDIES Volume 8(1) 2018
13 Pages Posted: 27 Aug 2018
Date Written: August 14, 2018
This paper argues that there is a missing ingredient in contemporary international law with regards to the protection of inter-governmental agreements concerning the joint development of straddle reservoirs of crude oil and gas. The first part of the paper examines the development, usefulness and constraints of cross-border unitisation. It acknowledges that cross-border unitization, though an effective partnership model for the joint development of crude oil and gas between neighbouring countries faces some social and legal challenges such as the effects of states’ internal conflicts on cross-border unitisation treaties and joint development agreements. The second part of this paper draws inferences from the Treaty between the Federal Republic of Nigeria and the Democratic Republic of Sao Tome and Principe on the Joint Development of petroleum and other resources, in respect of the Areas of the Exclusive Economic Zone of the Two States. It argues that the challenges faced by unitisation treaties can be significantly reduced by the inclusion of adequate social stability clauses in the partnership agreements. In many oil and gas producing countries, the mineral reservoirs straddle the boundaries of multiple countries especially within the maritime borders. This segment of the paper affirms that, the cross-border straddles are “… potential source[s] of international dispute[s] as to the nature and extent of rights as may be asserted by the several sovereigns under whose territory the pool lies … the potential for conflict is even stronger where the petroleum deposits straddle the common boundary of two or more countries, particularly where the shared boundary has not been delimited.” The nature of the spread of the mineral necessitates international co-operations of those countries to facilitate peaceful and lucrative extraction without waste and conflict. The paper concludes that International Unitisation Treaties and Joint Development Agreements (hereinafter referred to as JDA) are prevalent legal mechanisms by which nations form partnership in the development of oil and gas reservoirs that straddle the boundaries of the countries which are parties to the Treaty or JDA.
Keywords: Petroleum, International Law, Treaties, International Cooperation, Marine Resources, Comparative Law, Government, Jurisdiction, Hydrocarbons
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