Attention turns to offshore Malta

As IOCs have ramped up their activities in the Mediterranean Sea this year, amid the announcement of a licensing round scheduled for November in Lebanon, discoveries offshore Israel and significant exploration activities offshore Cyprus, several independents, including Genel Energy and Cairn Energy, have been awarded permits to explore for oil offshore Malta.

Heritage Oil, which shares licences for Areas 2 and 7 with the Maltese government, amounting to an area over 18,000 km² some 80 km off Malta's southeast coast, has announced that these Areas are “underexplored” and hinted at the existence of deepwater prospects after analysing newly acquired 2D seismic data. Despite the Jersey-based company's intention to drill a high-impact well in this area, it is awaiting the resolution of a border dispute between Malta and Libya before it can commence drilling.

Dating back to 1974, the border dispute between Malta and Libya started when Valetta awarded Texaco four blocks that lay north of the median line between Malta and Libya. After Texaco spudded their first well in 1980, exploration activities were forced to a halt following the despatch of a gunboat by Tripoli.

The dispute was taken to the International Court of Justice (ICJ) in 1982. After considering the case for three years, it was decided that the border would lie 18' north of the median line, to account for the disparity in the length of Libya and Malta's respective coastlines. Although both sides accepted the agreement, it only applied to a narrow strip of water and so border disputes continue to this day. Area 7, in which Heritage wants to drill, lies to the east and south of the designated border, and as such, Libya considers it to be in its territory. This was reaffirmed to Heritage by the Libya National Oil Company (LNOC) in 2008, shortly after the company received the block.

While the revolution in Libya may have removed from power those who were initially involved in the border dispute in the early 1980s, as well as the head of the LNOC who communicated with Heritage in 2008, and presented new security challenges to the current administration, there is no doubt that the oil-rich North African state will respond robustly if it feels Malta is drilling within the Libyan continental shelf. The imperative to resolve this long-standing border dispute will become more acute as the new finds lure larger oil and gas players into the increasingly competitive Mediterranean operating environment.

Nicaragua claims against Costa Rica rejected by ICJ

The International Court of Justice (ICJ) has rejected an application filed by Nicaragua in relation to its boundary dispute with Costa Rica, declaring the four counter-claims over Isla Calero, the small border territory between the neighbours, as inadmissible. Uniquely, the ICJ has also considered it appropriate to join two separate proceedings between the neighbours, at the request of Nicaragua, as to allow a single set of hearings and the delivery of a single judgement. 

In its reasoning for the joinder, the ICJ says that both cases, 'Certain Activities carried out by Nicaragua in the Border Area' and 'Construction of a Road in Costa Rica along the San Juan River', concern the same parties, a common border, activities in the San Juan River, the surrounding environmental implications and the same disputed treaty.

These counter-claims were dismissed unanimously by the ICJ on 1 May 2013. The first of these, relating to environmental damage, was declared “without object”. The second and third claims, in which Nicaragua requested greater sovereignty and free navigation rights, were ruled inadmissible. Finally, the fourth claim, alleging that Costa Rica did not implement the provisional measures set out by the ICJ on 8 March 2011, was deemed not necessary to entertain, as it will be further examined in the upcoming proceedings.

The first proceedings were instituted by Costa Rica against Nicaragua in 2010, over the alleged occupation of Costa Rican territory in relation to dredging of the San Juan River by Nicaragua. They argue that this activity violated their territorial rights, as spelled out in the 1858 Cañas-Jerez Treaty and the 1888 Cleveland Award, which awarded ownership of the River to Nicaragua, although commercial navigation rights were afforded to Costa Rica.

The second proceedings were instituted by Nicaragua against Costa Rica in December of the following year, citing “major environmental damages” in its territory resulting from major works, namely the construction of a road on the Costa Rican side of the border. Then, on 6 August 2012, Nicaragua filed four counter-claims in the first case, which were raised objectionably by Costa Rica to the ICJ, as well as Managua's request that the two cases be joined.

China rejects Philippine application for UN arbitration over disputed territories

China's Foreign Minister Hong Lei announced on 19 February that Beijing has rejected the Philippines' application for international arbitration over both states claims to disputed territory in the South China Sea which is known as the West Philippine Sea by Manila. The latter's Secretary of Foreign Affairs, Albert del Rosario, had announced on 22 January that the Philippines had taken the step of bringing China before an Arbitral Tribunal, under Article 287 of the United Nations Convention on the Law of the Sea (UNCLOS). The move followed nearly 17 years of unsuccessful bilateral discussions, initiated by the Philippines in 1995, over sovereignty of the potentially oil-rich waters.

China lays claim to, and controls, virtually the entire area, despite six countries claiming maritime territory in the South China Sea. This horseshoe-shaped area, delineated by China's so-called “nine-dash line”, stretches over a vast area that Beijing claims historical rights to. Rosario argues that this territory encompasses not only the entire South China Sea but also violates Philippine rights to a Territorial Sea and Contiguous Zone, an EEZ and a continental shelf, as stipulated by UNCLOS.

China's rejection of arbitration comes amid growing tension in Asian waters. Last year saw a standoff involving Chinese military ships and Philippine vessels after the former took control of the Scarborough Shoal, referred to by China as Nansha, over 500km due West of Manila. Following that incident, in which the Philippines eventually withdrew, China also engaged in military drills in the East China Sea, a clear show of force to Japan over their ownership of the disputed islets of Senkaku. The Philippine Secretary of Foreign Affairs has said that he will not be deterred by China's intransigence and will continue to press for arbitration over the regional hegemon's “excessive claim”.

Lebanon announces pre-qualification round for offshore oil and gas exploration

On Friday 15 February the Lebanese authorities announced the launch of a pre-qualification round for those IOCs interested in its offshore acreage. The statement came after news that up to 675 million barrels (MMB) of oil and 16 trillion cubic feet (TCF) of gas have been discovered in Lebanese waters adjacent to its northern maritime border with Cyprus and Syria. So far up to 30 IOCs have expressed their interest with contracts due to be signed in 12 months and drilling to begin at the end of 2015.

Despite the obvious potential, as witnessed by the US Geological Survey's (USGS) 2010 estimate that the Levant Basin as a whole could contain two billion barrels of oil and up to 123 TCF of gas, it has taken over two years for the government in Beirut – which has been dogged by slow-motion politics, neighbouring conflicts, and sectarian divides - to establish a Petroleum Administration to handle applications from IOCs bidding on exploration blocks. The delay has been compounded by the issue of the region's unresolved maritime border disputes.

In 2007 a bilateral agreement was signed between Lebanon and Cyprus on the delimitation of the former's Exclusive Economic Zone (EEZ) but, in protest at the 2010 bilateral agreement between Cyprus and Israel, it has never been ratified by the Lebanese government. There is a disputed area of 874 km², as Israel began its maritime border with Cyprus at Point 1 which coincided with the final point demarcated between Lebanon and Cyprus. Beirut argues, however, that this final coordinate was deliberately chosen because it was in uncontested Lebanese waters and that the de jure border should actually lie 17 kms further at Point 23. This dispute, as well as Turkish political pressure on Lebanon, has also held up the ratification of the 2007 Lebanese-Cypriot agreement, despite the existence of clauses in these agreements to accommodate for amendments.

In a move to hasten the acceptance of an agreement and strike an accord between Lebanon and Israel, which technically still remain in a state of war, Cyprus' outgoing President Demetris Christofias signed a memorandum of understanding with Lebanon's President Michel Sleiman in January 2013 to “ to increase co-operation to agree on principles and sound means that would allow us to extract this resource.” This latest discovery, plus the huge discoveries already made in both uncontested Israeli and Cypriot waters, have put fresh impetus on all sides to come to an agreement which will enable the whole of the Levantine Basin to be explored without violating each other's maritime sovereignty. 

China warns Vietnam over disputed waters

On Thursday 21 June, in a new show of its resolve over the South China Sea dispute Beijing warned Vietnam for passing a law that claims sovereignty over the oil-rich Paracel and Spratly Islands, saying they are the ''indisputable'' territory of China.

China's Foreign Ministry in Beijing called on Vietnam's ambassador Nguyen Van Tho to oppose the new law. A ministry statement said: “'Vietnam's Maritime Law, declaring sovereignty and jurisdiction over the Paracel and Spratly Islands, is a serious violation of China's territorial sovereignty…China expresses its resolute and vehement opposition.''

Vietnam's National Assembly approved the law on Thursday, stipulating that all foreign naval ships passing through the waters are required to notify Vietnamese authorities. The dispute about the law, which has been in the making for years, is yet another one of China's attempts to tell Vietnam that the South China Sea is its rightful domain.

China's statement comes two weeks ahead a meeting of foreign ministers of the Association of Southeast Asian Nations in Phnom Penh, Cambodia, which will be attended by US Secretary of State Hillary Clinton. The South China Sea dispute is expected to be high on the agenda.

To fortify its claims, China has also raised the level of governance on three island groups in the sea: the Spratlys, the Paracels and Macclesfield Bank. The Chinese State Council issued a statement placing the three groups of islands and their surrounding waters under the city of Sansha as a prefectural-level administration rather than a lower county-level administration.

Sources: Upstream, Bloomberg, The New York Times

Philippines plans more oil and gas exploration in disputed area

According to Energy undersecretary Jose Layug, the Philippines are planning more oil and gas exploration in the disputed Scarborough Shoal region of the South China Sea. In an interview with ABS-CBN Layug said: "The Chinese are claiming [these areas] but we have said repeatedly that [they are] well within the territorial jurisdiction of the Philippines."

The news comes amid accusations that Beijing is employing "bullying" tactics. According to the Philippines on Saturday 8 April, China allegedly deployed a ship dangerously close to two Philippine vessels in the disputed South China Sea. In the alleged incident a Chinese vessel speeded past two Philippine coast guard ships at more than 37 km per hour, creating a high wave that buffeted the vessels.

No one was hurt but according to foreign department spokesman Raul Hernandez this move by “the Chinese vessel posed a danger to the Philippine vessels". He added: "Our ships did not react to the bullying.”

This latest incident is the most serious since the standoff began on 8 April, when the Philippines tried to arrest Chinese fishermen in the shoal for poaching and were blocked by Chinese ships. China has warned the Philippines against internationalising the conflict over the disputed area, about 230km from the Philippines' main island of Luzon. Experts fear that the on-going conflict may destabilise regional security.

China has territorial disputes with the Philippines, Vietnam, Brunei, Malaysia and Taiwan across the South China Sea, and these nations are worried about what some see as growing Chinese assertiveness in staking claims over the sea's islands, reefs and shoals.

Sources: Rigzone, AFP, Reuters

China and the Philippines in South China Sea stand-off

Ships from China and the Philippines are engaged in a stand-off over a remote and disputed shoal in the South China Sea. Despite the tension, both sides are pledging a diplomatic solution.

A warship from the Philippines approached the Scarborough Shoal, off the country’s northwestern coast, on 7 April as part of a routine patrol. There it found eight Chinese fishing boats, and upon boarding them claimed to have found illegally-caught fish and coral.

Two Chinese surveillance boats then arrived and blocked the Philippine warship from arresting the fishermen. A third arrived on 11 April, whilst the Philippines sent a second vessel to back up its warship on 12 April.

 

The situation is reportedly tense, with the fishermen essentially blockaded onto the uninhabited shoal. The Chinese media has taken a bellicose stance, warning that it will “react accordingly” in the event of a military clash and accused Manila of taking a “radical approach”.

Chinese state media and government officials have also been insistent that the shoal belongs to China. Filipino Foreign Secretary Albert Del Roasrio, meanwhile, said that the shoal “is an integral part of Philippine territory”.

The dispute over ownership reflects a much wider dispute over maritime borders in the South China Sea. China claims vast tracts of the sea, including its many island chains, largely due to the extensive oil and gas resources which are believed to lie beneath them.

 

Despite the confrontation, both Manila and Beijing have stated their commitment to a diplomatic solution. Filipino officials have reportedly proposed a compromise solution, although details have not been made public and China has not formally responded.

 
The situation is likely to cool down but it underscores the rising tensions across the South China Sea, where relations China and US-backed states are increasingly fraught. Manila recently called for a coordinated stance by South-East Asian states on the South China Sea, before entering into discussions with China on maritime borders.

Sources: Guardian, BBC, Global Times, Reuters