Acrimony, mutual distrust and a prevailing public sentiment of futility in engaging each other on border dispute resolution conditioned by a century of mixed results, have come to characterize the relations between South American neighbors the Bolivarian Republic of Venezuela and the Cooperative Republic of Guyana. Recent engagements of the Parties at the International Court of Justice (ICJ) signal the possibility of a definitive determination. However, the history of non-compliance with the Court’s ruling though minimal, and the practice of not proffering recommendations or deciding upon measures to give effect to these judgments by the Security Council to which the parties may seek recourse as envisaged in Article 94 (2) of the UN Charter, point to the possibility of this unresolved dispute lasting for an extensive period of time. The author’s primary objective of this paper is to explore in an academic space, the feasibility of joint exploitation of resources in disputed maritime zones by the two countries, as an interim dispute settlement measure, the development of which would otherwise be continually in abeyance in an era of technological erosion of borders, migration of peoples, enhanced inter-country market dynamics, albeit globalization, against the backdrop of an imminent threat of dramatic reduction in, or ban on new investments in the development of offshore oil and gas resources. The paper employs a simplistic methodology in achieving the set objective: a logical thread knits the thematic areas together, an analysis of analogues ensues, as well as good practices adduced presenting ultimately; an overall picture supportive of the embarking upon a Joint Development Agreement (JDA); by these neighboring disputing States, soonest.
Keywords: Dispute Settlement, Controversy, Joint Development Agreement, Jurisdiction, Arbitration, Pacta Sunt Servanda, International Court of Justice.
Рамки для предлагаемого соглашения о совместной разработке между Гайаной и Венесуэлой
Аннотация: Ярость, взаимное недоверие и преобладающее в обществе мнение о бесперспективности взаимного урегулирования пограничных споров, обусловленное столетием неоднозначных результатов, характеризуют отношения между соседними южноамериканскими государствами — Боливарианской Республикой Венесуэла и Республикой Гайана. Недавние обращения сторон в Международный суд (МС) свидетельствуют о возможности окончательного решения. Однако история невыполнения решений Суда, хотя и минимальная, и практика отказа от рекомендаций и принятия мер по исполнению этих решений Советом Безопасности, к которому стороны могут обратиться в соответствии со статьей 94 (2) Устава ООН, указывают на возможность того, что этот неразрешенный спор затянется на длительное время. Основной целью данной работы является изучение в академическом пространстве возможности совместной разработки двумя странами ресурсов в спорных морских зонах в качестве временной меры урегулирования спора, развитие которого в противном случае постоянно приостанавливалось бы в эпоху технологического размывания границ, миграции народов, усиления динамики межстрановых рынков и глобализации на фоне надвигающейся угрозы резкого сокращения или запрета новых инвестиций в разработку морских нефтегазовых ресурсов. В статье использована упрощенная методология достижения поставленной цели: логическая нить связывает тематические направления воедино, проводится анализ аналогов, приводится положительный опыт, что в итоге дает общую картину, способствующую скорейшему заключению Соглашения о совместном развитии (ССР) между этими соседними спорными государствами.
Ключевые слова: Урегулирование споров, Разногласия, Соглашение о совместном развитии, Юрисдикция, Арбитраж, Pacta Sunt Servanda, Принципы, Международный суд.
Introduction
Guyana and Venezuela established diplomatic relations on April 19, 1975 [1], notwithstanding their century plus prolonged territorial dispute. The territory in dispute-the Essequibo region- represents a significant part of Guyana’s territory, approximately 2/3; and correlatively by extension, a significant maritime claim of the territorial sea, contiguous zone, continental shelf, and economic exclusive zone given the geography of the territorial claim. Please refer to the pic below.
caribbeannationalweekly.com [2]
In these disputed maritime zones, littoral States have significant treaty obligations, inclusive of the exercise of restraint. While Venezuela has not ratified the third United Nations Law of the Sea Convention (UNCLOS-1982), it recognizes like the USA, that customary norms of international law are reflected in the codified UNCLOS, and is therefore a source of law subscribed to. Guyana on the other hand is a party to the convention, and sought recourse to the ICJ through one of its mechanisms in a maritime dispute with Suriname.
The feasibility of joint exploitation of resources in disputed zones offshore by the two countries as an interim dispute settlement measure is instructively urgent, especially against the backdrop of an imminent threat of dramatic reduction or ban on new investments in the development of offshore oil and gas resources. This notwithstanding, the United Kingdom (UK) plans to issue licences to develop new prospects in the North Sea [3], a move which environmentalists argue runs counter to the UK’s net-zero emissions predictions.
The legal framework within which such negotiations may transpire is anchored in UNCLOS Articles 74 (3) and 83 (3), which treat with the Continental Shelf (CS) and Exclusive Economic Zone (EEZ), and provide commonly that there are four (4) obligations of States where the EEZ and CS overlap:1. to conduct a delimitation of their overlapping zones by agreement (Articles 74(1)) and 83(1);2. to resort to the dispute settlement procedures of Part XV of the UNCLOS, when no agreement can be reached within a reasonable period (Articles 74(2) and 83(2);3. pending an agreement to make every effort to enter into provisional arrangements of a practical nature (Articles 74(3) and 83(3); and not to jeopardize or hamper the reaching of a boundary agreement (Articles 73(3) and 83(3).[4]
As such, it mandates, inter alia, the disputing States to enter into a provisional arrangement of a practical nature as a resort to peaceful means of settling the dispute. This requires Venezuela and Guyana to establish a mutual comprehension of the zone in dispute and its resources, to exchange views, as required by the obligations set under Article 283 of UNCLOS, which additionally, sets forth the choice of procedure and by extension, the obligation to inform the public as to what means may have failed.
The legal basis of a Joint Development Agreement (JDA) for maritime boundary delimitation with which this article is largely concerned, is an agreement regulated by either international customary law, international agreements and/or conventions, where related regulatory articles may be found. In the Guyana -Venezuela scenario, where the latter is not a party to UNCLOS, the North Sea Continental Shelf case provides guidance. The ICJ found that, although the Federal Republic of Germany had signed but not yet ratified the 1958 Geneva Convention on the Continental Shelf when examining the delimitation in Article 6 as to whether it should be applied or not to demarcate the boundary between Germany, Denmark and the Netherlands, Germany could not be contractually bound by the Convention in the absence of ratification, however; that did not necessarily preclude a State from being bound by estoppel, since the State’s past conduct and declarations were sufficient to induce detrimental reliance by other States. The ICJ rejected the argument that Germany was bound by Article 6 through the doctrine of estoppel, finding Germany’s acts did not provide clear acceptance of the delimitation regime, but that it could be bound notwithstanding, by customary international law or general international law [5]. It is worth noting, that the settlement of the permanent demarcation line may be referred to any of the peaceful means of settlement, while it is also possible to establish provisional JDA measures as a permanent settlement of the lines drawn over time.
International customary law regarding the settlement of international disputes through peaceful means were first codified in the “Convention for the Pacific Settlement of International Disputes” at The Hague in 1899 [6]. The Convention mandated Contracting States to first refer to the peaceful means of settlement before resorting to arms. It was reviewed in 1909 and amended accordingly. Both Conventions envisage negotiation, good offices and mediation as peaceful means for the settlement of disputes. The 1909 Convention was replaced by the “General Act for the Pacific Settlement of International Disputes”, signed in Geneva in 1928, by 22 Parties. This later impacted Article 33 of the United Nations Charter significantly.
The list of peaceful means provided in Article 33 as mentioned above is not clausus numerus, although Part XV of the UN Charter in terms of maritime delimitation disputes, implies that the conventional peaceful means of settlement must first be explored as listed in Article 33, before the resort to specific means such as a Joint Development Agreements.
The conditions to which one resorts, and the necessity to contemplate provisional measures, obtained for example in the Gulf of Guinea between Nigeria and Sao Tome e Principe in 2000, that led to the entering into a Unitization Agreement premised on a Treaty signed in 2001, which entered into force in 2003, applicable to the total area of their overlapping claims.
The context and status of the matters involving Guyana v. Venezuela at the ICJ, and the myriad possible outcomes, do not prohibit the possibility of the creation of a framework for cooperation and collaboration in the vast areas of the maritime zones under dispute between these two neighbors. The proposal to create such an enabling body in a pre-defined zone, must consider factors such as the interim non-permanence of such an arrangement or arrangements guided by international customary norms of law, and its codified version- UNCLOS, and peaceful character such an undertaking must assume. Further, in the conceptualizing of such a facilitating arrangement, it is therefore necessary to be guided by the principles known to international law to govern and give legal effect to such an arrangement.
A salient point of departure in a relevant analysis as to the prospects of such an arrangement, may serve an assessment of what to avoid in the setting up of a sustainable arrangement. These include deterioration of bilateral relations, especially in the absence of a code of conduct as the primary underlying element required for the successful implementation of a JDA, establishing the regime during low oil and gas prices, intense domestic opposition, lack of incentives, third-party intervention, absence of energy security and bilateral disagreements on details [7].
Peculiarities of the Undertaking of a Provisional Agreement to Jointly Develop a Zone for Oil Exploration and Exploitation between Guyana and Venezuela, as a peaceful means of settlement of the controversy
The Venezuela-Guyana prospects for the concluding of a JDA would be required to overcome innumerable hurdles at various levels, both external and internal.
Externally, the overlapping maritime zones in dispute as geometric projections from the baselines of territorial claims, involve a number of states: Suriname, Barbados and Trinidad and Tobago, which could make developing such a zone in the opinion of some, appear to be a de facto acquiescence by Guyana to the validity of Venezuela’s claim- and therefore bringing their maritime space into question by way of geometrically enveloping parts of their declared maritime spaces.
Venezuela has been a world-leading exporter of oil and has relatively developed infrastructure and management systems of this sector, with its first oil wells dating back to the 1910’s. The intervention of World War I and attendant logistical difficulties led to a scaling back of efforts aimed at prospecting and drilling, but it was the blowout of the Barros No. 2 well in Cabimas in 1922, which saw the start of Venezuela’s modern history as a major producer, with foreign companies acquiring land to explore and exploit these resources, and by 1928 Venezuela became the world’s leading exporter of oil [8]. However, the subsequent ebb and flow of depressed world oil prices, inflation, policies, and general typical boom and bust experiences coupled with embargo by the US have contributed to negative economic growth. The rolling back of the embargo in recent times incrementally, has created the possibility for the need to cooperate with Guyana, mediated by a permanent member/s of the Security Council (SC) of the United Nations or any other party the two States may decide upon.
Guyana on the other hand is a new entrant in the oil and gas arena, with first discovery of commercial quantities occurring in 2015 by Exxon in the Stabroek Block, and discovered reserves of 11 billion barrels of oil equivalent. Current licensees include Exxon-Mobil 45%, HESS 30% and CNOC 25% [9]. Internally, the populations of both countries may see any negotiation to conclude a joint development area as weakening their claim, a risk no ruling government or party would be willing to undertake for fear of losing power and incurring the wrath of angry sections of society.
These elements have served in the past to hinder the concluding of JDAs, for example, the 1979 Thailand-Malaysia MOU due to disagreements of the two parties over the role of the MTJA [10] (Malaysia-Thailand Joint Authority), a supranational body, as regards governing rights, even though the Agreement intended to imitate the Japan-South Korea 1974 JDA [11]. There was also the issue of the Thai government’s commercial dispute over pre-existing rights granted to two oil concessionaires [12]. Large geographical JDAs are notably harder to delimit and conclude an agreement on, as obtained in the 1974 Japan-South Korea Agreement, as opposed to smaller areas of Joint Development Zones, which was the case with the Malaysia-Vietnam Agreement of 1992 [13].
Three broad structural models are common in the literature on forms of JDAs; these are (i) the single-state model; (ii) the joint venture model; and (iii) the joint authority model.
Single-state model
This is the simplest of the options, which requires legal and institutional harmonization, resulting in one state managing the deposits in the disputed area on behalf of both states. After costs invested by the managing states are subtracted, the revenues are shared, as was common to earlier models such as Bahrain and Saudi Arabia (1958), Abu Dhabi and Qatar (1969), and Sharjah and Iran (1971), but have been in less use on account of the apparent loss of control by the state less engaged in management as perceived by its nationals, premised on the doubts which arise as regards the seemingly diminished strength of the less active partner’s dispute claims.
There has however recently been a return to this model by way of the Brunei-Malaysia arrangement established viz bilateral Exchange of Letters in 2009 [13].
Joint Venture Model
This is the most popular of the three options. The participating States conclude joint venture agreements between their national oil companies or other representative bodies in identified development zones, or compulsory unitization of transboundary deposits and the nomination of a single operator to exploit the deposits therein, acting on behalf of all operators.
The unitized deposits may lie within or straddle the boundaries of the participating States’ designated area of exploit. These joint development zones usually correspond to the disputed continental shelf/EEZ claims. It is not common for there to be established a JDA in cases when there is compulsory unitization of the resources, but the maritime boundaries have been established, while this is not a classical joint venture model, states practice has embodied this kind of arrangement and there have been successful international cooperative ventures, mostly found in the North Sea. It is possible for a third party to be elected to out-source the management of the Authority by that third party. The Vietnam-Malaysia arrangement (MoU 1992) is an example of such a Model, with delegated authority to their respective National Oil Companies.
Joint Authority Model
By far a more complex model, requiring a higher degree of integration and harmonization. Under this model, the States participants establish an international joint authority or commission with legal personality, licensing and regulatory powers. The political will of the respective populace are supportive of the venture, and strict accountability and transparency are required. This involves a supranational authority, which makes it a sensitive issue. Here the Malaysia-Thailand agreements (1979 and 1990), Timor Leste— Australia (2003) can be cited as excellent examples of this model.
A Guyana-Venezuela Model JDA
In the circumstance of the century prevailing territorial dispute between Guyana and Venezuela, the degree of distrust among these States and its peoples, as relates to the claims and the current discoveries of oil and gas reservoirs offshore Guyana, the Single State Model would be rejected by both parties. Should one party agree to this model, the other would suspect ulterior motives in respect of the validity of its claim. The Joint Venture Model would also provide some challenges as regards the need to enter into several venture agreements as new prospects are discovered. On the other hand, a Unitization Agreement would be contingent upon the location of the discoveries, but yet again may require multiple such agreements in the event of multiple trans-boundary discoveries. The Joint Authority model with the attributing of governing rights to a supranational body may also not be favored as in the case of the Malaysia-Thailand Agreement, especially in an atmosphere of hostility. The current practice of Norway and the UK may however be replicated as preferred, in the form of a Framework Model
In summary, an eclectic approach may be apt, in order to harness the best available practices in this regard, in order to optimize the exploitation of the resources, and create the conditions for peaceful coexistence and grounds for the definitive resolution of the maritime delimitation dispute. Given its successful implementation and body of accumulated practice over the years of co-management, it is proposed that the Norway-UK Framework Agreement of 2005 is utilized as the core of the proposed agreement’s structure. Supplementarily, an incorporation of other useful elements of joint development models can be adopted in accordance with the facilitating nature of the Framework Agreement. This would require foremost, the concluding of an Agreement between the two governments, on the aims and objectives, the principles underlining the engagement, and general pillars upon which a Framework Agreement may be built as a preliminary confidence and trust building measure.
This should be followed by the drawing of a provisional equidistance line using the lines projected from the baselines of the disputed area with an equitable ratio of the coastline, and includes the territorial sea as defined in UNCLOS, with strict observance of the regime of the latter. Any exploration and exploitation activity on the CS and EEZ, should be conducted exclusively jointly, except as otherwise agreed. This may include seismic activity for gathering of data, which predicates the identification of prospective high yield reservoirs in the disputed area for joint development, and the inclusion ab initioof an agreed to Operator licensee/s to develop a relatively small but seismically solid prospective zone in consultations as to the manner in which any trans-boundary reservoirs may be most effectively exploited, and the manner in which the proceeds deriving therefrom may be apportioned.
Scope of The Proposed Framework Agreement
The Framework Agreement should seek to include consensual approaches on the laying of pipelines and their operation for transportation of petroleum produced within the zone to destinations beyond the zone of dispute based on fairness, transparency, and non-discrimination. The Agreement shall apply to a pre-determined zone for joint developmental activity within the trans-boundary or general zone in dispute. A definition of the zone to be commonly exploited will be required in order that activities are restricted to these areas. Further, a determination of the treatment of the territorial sea will be required. The Sudan-Saudi Arabia Joint Development Agreement of 1974 [14] relating to the joint exploitation of the natural resources of the seabed and subsoil of the Red Sea, in the common zone at Article 5 notes, no part of the territorial sea shall be included in the common zone, however, in a different approach to the matter of treating with the territorial sea, the Joint Development Agreement between Kuwait and Saudi Arabia in Articles I and VII, provide that the territorial sea is expressly considered part of the joint development zone [15]. Accordingly, once the territorial sea has been determined provisionally, the Contiguous Zone should be used in conformity with the UNCLOS regime for the respective coastal States Guyana and Venezuela, and the CS and EEZ shall be subject to the equidistance principles of division for exploitation and identification of the provisional boundary, in order to identify the transboundary zones unless otherwise agreed by the two States. In all cases, reference should be made to geodesic points and co-ordinates of a Chart, as obtained in the agreement between Timor Leste and Australia 2002 [16], which imposed a ban on negotiating a peaceful settlement for the next 50 years, notwithstanding the UNCLOS recommendation for the negotiating of an eventual final settlement.
The agreement between Japan and South Korea [17], which defines the joint development zone by reference to straight lines joining given co-ordinates in Article II, poses the possibility of different interpretations under International Law as charts indicating a curved three-dimensional surface on flat paper, may contain a distortion in either the line of longitude or latitude as employed in the UK-Norway Continental Shelf Agreement supraor the France Spain Agreement [18], Article 2 (1). In the circumstance, when using charts as an alternative method of defining the JDA, the scale used should allow for accuracy of information when referenced to such Chart, the scale of which should be 1:500,000 by a line of 3 mm thick to represent a line.
The Agreement should include, inter alia, provisions on authorization, authorization regime, cross-boundary pipeline, cross-boundary project, delimitation line, exploitation, Host-facility, infrastructure, inspector, inspectorate, licence, licensee, Operator, Petroleum, pipeline, trans-boundary reservoir, unit zone and unit project, and dispute settlement mechanism.
Conclusion
Time, politics and environmental dispositions may prove to constrain effective development of offshore resources in zones disputed by Guyana and Venezuela in the event of a moratorium on new investments in the Oil and Gas sector.
The establishing of a Joint Development Agreement between the two countries in a predetermined maritime zone with the support of the citizens of the two countries on an equitable scale, may be created within the spirit of Articles 73(3) and 84 (3) of UNCLOS, resorted to through the instrumentality of Article 33 of the UN Charter on ‘free choice of means, as a provisional dispute settlement measure, which does not aim to hamper or jeopardize the reaching of a final agreement on delimitation.
Bibliography
1. Countries With Which Guyana Has Established Diplomatic Relations. URL: https://www.minfor.gov.gy/consulates/countries-guyana-relations
2. Caribbean National Weekly. URL: https://www.caribbeannationalweekly.com/caribbean-breaking-news-featured/us-supports-icjs-decision-to-settle-guyana-venezuela-border-dispute/attachment/guyana-venezuela/
3. Sunak says approving new licences for oil and gas drilling ‘entirely consistent’ with net zero plan – as it happened. The Guardian. URL: https://www.theguardian.com/politics/live/2023/jul/31/rishi-sunak-oil-gas-north-sea-tories-labour-uk-politics-live
4. United Nations Convention on Law of the Sea. URL: https://www.un.org/depts/los/convention_agreements/texts/unclos/unclos_e.pdf
5. North Sea Continental Shelf (F.R.G. v. Den. & Neth.) 1969, I.C.J. 3, Feb. 20.
6. Pacific Settlement of International Disputes, Hague, adopted on 29 July 1899, entered into force on 4 September 1900, United Nations Treaty Series, 32 Status 1779.
7. Why Joint Development Agreements fail: Implications for the South China Sea Dispute, Song Xue, Contemporary Southeast Asia, Vol. 41, No. 3 (December 2019) p. 421, Published by ISEAS-Yusof Ishak Institute.
8. One Hundred Years of a Lost Blowout, the Untold Story of Los Barrosos No. 2, December 2022, Orlando Mendez. Available at: http://explorer.aapg.org/story/articleid/64481/one-hundred-yers-of-a-blowout
9. The Stabroek Block Production Sharing Agreement (PSA). URL: https://www.resourcecontracts.org/contract/ocds-591adf-1399550295/download/pdf
10. MTJA-Malaysia-Thailand Joint Authority formed under the 1979 Memorandum of Understanding and the 1990 Agreement.
11. Guoqing Luo and Wei Guo, “Nan Hai Hong Tong Kai Fa An Li Yan Jiu” (Analyzing Two Joint Development cases in South China Sea), Southeastern Asian Affairs no. 2 (June 2012): 48.
12. Schofield C. Unlocking the Seabed Resources of the Gulf of Thailand // Contemporary Southeast Asia. Vol. 29, No. 2 (August 2007), P. 286-308.
13. Thao, Nguyen. (1999). Joint Development in The Gulf of Thailand // Vietnam and Joint Development in The Gulf of Thailand. 2003.
14. Agreement Between the Government of the Democratic republic of The Sudan and the Government of the Kingdom of Saudi Arabia relating to the Joint Exploration of the Natural Resources of the Seabed and Subsoil of the Red Sea in the Common Zone, 1974. URL: https://treaties.un.org/doc/Publication/UNTS/Volume%20952/volume-952-I-13605-English.pdf
15. Kuwaiti Saudi Arabia Treaty regarding the shared oil and gas deposits of the divided Zone, 2019.
16. The Timor Sea Treaty, to allow the exploitation of oil and gas resources in a part of the Timor Sea named the joint Petroleum Development Area, 2002.
17. The Agreement concerning joint development of the southern part of the continental shelf adjacent to the two countries (with map, appendix, agreed minutes and exchange of notes) signed at Seoul on 30 January 1974. URL: http://www.marineregions.org/eezdetails.php?mrgid=21796
18. France-Spain Maritime Boundary Agreement, 1974. See also the Resolution of the United States on Practical Problems in respect of the Deep Seabed Mining Areas, 1987, as regards use of coordinates.
Information about the author:
Lancelot G. Wills – Former Senior Foreign Trade Officer, WTO Fellow, Former Head of Guyana’s Customs and Trade Administration, Former Head of Legal Services, Current Head of Customs Petroleum, Guyana Revenue Authority.
Информация об авторе:
Ланселот Г. Уиллс – бывший главный специалист по внешней торговле, член ВТО, бывший глава Таможенного и торгового управления Гайаны, бывший руководитель юридической службы, нынешний руководитель таможенного нефтяного управления Налогового управления Гайаны.
