Overlapping claims - United Nations in Cambodia

Fuelling Poverty Reduction
Overlapping claims
Genoveva Josée da Costa
Advisor on Joint Development Zone to the Minister of Natural Resources and Environment
Ministry of Natural Resources and Environment
São Tomé et Príncipe
São Tomé and Príncipe is a small island in the Gulf of Guiné and has been one of the
most active regions for oil exploration in the last decade where the poverty level is
very high and with a very weak institutional framework.
Overlapping claims issues are always important for the countries involved. The
Democratic Republic of São Tomé and Príncipe has had an interesting experience in
dealing with this situation. São Tomé and Príncipe and Nigeria have an overlapping
area of about 35,000 square kilometres that borders a Nigerian territory with very intense
hydrocarbon activity. Block 1 in the Joint Development Zone (JDZ) is only a few
kilometres south of Nigeria’s Akpo field, which is believed to contain reserves of about
1.5 billion oil equivalent barrels.
In 1998, São Tomé and Príncipe filed a territorial claim with the United Nations to
establish an Exclusive Economic Zone (EEZ) based on the median line principle stipulated
by the United Nations Convention on the Law of the Sea.
Nigeria contested the claim, arguing that the northern part of the proposed EEZ was
within Nigeria’s own EEZ.
In 1999, the Nigeria and São Tomé and Príncipe started negotiations on boundary
delimitation.
In 2000, after the ministerial and technical teams of both countries could not reach an
agreement on boundary delimitation, the two heads of state reached a consensus
and signed a joint political communiqué towards the establishment of a JDZ in the
overlapping claims area. The two countries agreed to work together to develop the
area and to benefit from any oil or gas discoveries that are made.
Political will was a crucial determinant in this process.
In 2001, São Tomé and Príncipe and Nigeria signed and ratified the Treaty for Joint
Development of petroleum and other resources in the maritime areas claimed by both
countries, which now constitutes the JDZ.
The key provisions of the Treaty grant Nigeria 60 percent and São Tomé and Príncipe
40 percent of all benefits and obligations arising from development activities carried
out in the JDZ. Its geographic coordinates define the JDZ, and the treaty will remain in
force for 45 years with a review after 30 years. Neither country had to renounce its own
claims to the zone.
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Fuelling Poverty Reduction
Although the two countries did not renounce their claims to the zone, the Treaty
called for joint exploration of natural resources for a period of 45 years, unless otherwise
agreed after a review in the 30-year period.
The Joint Development Authority (JDA) for the JDZ, which is based in Abuja, Nigeria
with a liaison office in São Tomé and Príncipe, was created to manage the exploitation
of resources in the JDZ.
The JDA responds to the JMC (the Joint Ministerial Council of the Joint Development
Authority for the offshore Joint Development Zone between the Federal Republic of
Nigeria and D.R. São Tomé and Príncipe), comprised of four ministers or officials of
equivalent rank from each country.
The JMC is the ultimate decision-making body for the JDZ. Decisions taken by JMC
and JDA are made by consensus. If the JMC deadlocks, the dispute is referred for
resolution to the heads of state of the two countries.
In 2002, the JDA established under the treaty began operations with the inauguration
of four executive directors – two for São Tomé and Príncipe (commercial and
investment and non-hydrocarbon) and two for Nigeria (administration and finance,
and monitoring and inspection).
JDA launched the first licensing round in the JDZ in 2003, and the 2nd licensing round
in 2004. In 2005, JDA signed the first Production Sharing Contract (PSC) for Block 1 in
the JDZ, known as OBO1 (operated by Chevron). JDA signed PSCs for Blocks 2, 3 and
4 in 2006.
The signature bonuses from these blocks were shared by both countries – 60 percent
for Nigeria and 40 percent for São Tomé and Príncipe.
So far, our experience in dealing with overlapping claims areas has been interesting
and challenging in the sense of meeting international standards and governance
requirements, as well as in dealing with the burden of operating costs related to the
management of the JDZ. In terms of transparency, both heads of state signed the
Abuja Declaration that imposes transparency practices in all of the operations carried out
in the JDZ.
Oil production in the overlapping claims zone will begin in 2012. Until then, the state
parties will continue to finance the operating costs of the JDA.
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