CGX resumes operations at disputed Guyana well

Toronto-based explorer CGX has restarted drilling at the Eagle 1 well off Guyana, after a seven-year delay caused by border disputes between Guyana and Suriname. The resumption comes as part of increased interest in the oil and gas prospects off the northern coast of South America.

CGX, which has a 100% stake in the Corentyne licence where the Eagle well is located, restarted operations on 9 February. CEO Steve Hermeston said in a statement that the resumption “marks a significant milestone in the history of CGX”.

Drilling was suspended in June 2000, when Surinamese naval forces ordered a CGX rig to leave the area, accusing it of drilling in Surinam's waters. The area in dispute, the Guyana-Suriname basin, is believed to hold major gas and oil deposits.

The two sides contest the exact territorial line through the basin and the Corentyne river which empties into I – both parties aimed to get the largest possible share of the basin. In 2004, smarting from the suspension of the CGX contract, took the case to a tribunal operating under the auspices of the UN Convention on the Law of the Sea.

The five-member tribunal issued a ruling in September 2007 which allowed both sides to have access to the basin and the river, but gave Guyana a larger share of the basin itself: 12,800m2 compared to Suriname's 6,900m2. Despite the disparity, both sides have welcomed the result, with Suriname's president saying he was “delighted” at the ruling.

The resumption of operations by CGX is a clear vote of confidence in the new situation and a sign that exploitation of the region's resources can proceed.

Sources: Upstream, BBC

Disputed waterway between Iran and Iraq reopens

Commercial traffic has resumed on the Shatt al-Arab waterway between Iraq and Iran for the first time in 30 years, reflecting decreased tensions over the disputed marine boundary between the countries.

The reopening of the waterway, which runs for 120 miles down from the Gulf, follows the opening of a new jetty by Shell designed to support operations at the Majnoon oilfield on the border with Iran. The new facility is situated about 50 miles up the Shatt al-Arab: ships travelling there must first pay customs duties at the port of Umm Qasr on the edge of the Gulf.

Although there are other small harbour facilities down the course of the Shatt al-Arab, the Shell facility is the first major facility to be established there since the Iran-Iraq war interrupted southern Iraq’s oil operations in 1980. The war began in part due to a dispute over the border line through the Shatt-al Arab, which provides vital access to the Gulf.

The opening of the port suggests that the boundary dispute over the waterway, although not settled, is not proving an impediment to commercial activity there. Most of the remaining sections of the border have been agreed, and in late 2010 the Iraqi government said that the demarcation of the Shatt al-Arab line would begin under the auspices of the UN.

It seems that the process of demarcation is still underway. Nonetheless it seems that Iran is willing to accept – at least for now – some common usage of the waterway. This illustrates the warming political ties between Baghdad and Tehran and their willingness to move onwards from the disputes of the past.

Sources: AFP, France 24

South Sudan insists on border deal for oil

South Sudan has demanded that a border agreement with Sudan should be signed before it restarts oil exports, amid a growing row over the situation along their boundary.

On 29th January, South Sudanese Oil Minister Stephen Dhieu Dau said that “oil production will restart when we have a comprehensive agreement and all the deals are signed”. The country has shut down all its oil production over the past few weeks after Sudan started taking oil in lieu of fees which it claims are owed by South Sudan.

The north controls the oil export pipelines but most of the actual production is concentrated in the south. After the south became independent last July, this became a major point of contention between the two Sudans. Oil accounts for 98% of South Sudan's budget, so the oil shutdown will have serious economic effects; however, the north is also heavily dependent on oil transit and export fees.

South Sudanese officials are now demanding that the sides settle a whole host of issues before oil exports restart. One of the most significant is the status of the broder and the disputed region of Abyei. “Sudan must recognize the 1956 border, which means they must give back all the areas under occupation,” according to Dau.

This would mean handing over control of Abyei, a nexus for local rebellions and cattle raids which have killed hundreds in recent months. Juba has accused Khartoum of supporting local gunmen who have rampaged through the border region; the north, in turn, accuses the south of backing insurgents who were affiliated with the ruling southern party but were left in Sudan after the secession agreement.

The UN has called on both sides to pull back from Abyei, insisting that the presence of police and security forces there was destabilising the border situation. However with the UN peacekeeping force there still under-strength and unable to control the region, neither side is willing to pull back until it has secured a favourable verdict on the border region and its oil wealth.

Sources: Telegraph, Reuters, Sudan Tribune

Norway to open up Barents for exploration after border demarcation

The Norwegian government is to propose exploration of a new sector of the Barents Sea, after a maritime boundary there was finally agreed with Russia.

Oil Minister Ola Borten Moe has said that the new area in the south-east Barents, covering around 44,000km2, could be explored from spring 2013. The government has already started seismic assessments in the region.

The demarcation of the maritime border with Russia was formally ratified last summer. Russia and Norway had been locked in a territorial dispute over the region since 1970, when Norway argued that the boundary should be drawn at the middle point between the nearest land areas belonging to both sides. Russia used claims drawn up by Stalin (unilaterally) that proposed a 'sectoral' approach along certain meridian lines.

A moratorium on oil and gas drilling in the disputed zone was announced in 1975, and the border was demarcated in 2010 based on a compromise which divides the disputed zone into two roughly equal parts.

Exploring the Barents Sea will allow Norway to begin offsetting its dependence on its North Sea oil and gas reserves, which are steadily declining. 181 blocks in the region have been nominated by oil companies in the preliminaries for the latest exploration round, the highest ever number. Nominating companies include ExxonMobil, Shell, ConocoPhillips, Total and Statoil.

The Oil Ministry will assess the nominations and announce which blocks are an offer by the summer, with full exploration work expected to go ahead by next year.

Sources: Upstream, Reuters, BBC

Indonesia to send observers to mediate Thailand-Cambodia border dispute

Indonesia has announced that it will deploy military observers to mediate the long-running border dispute between Thailand and Cambodia, after the two sides agreed to request Jakarta's involvement.

The announcement makes a breakthrough for the dispute, which has seen a number of deadly clashes between Thai and Cambodian troops around the Preah Vihear temple. The temple was given to Cambodia by the International Court of Justice in 1962, but Thailand continues to claim the surrounding land.

After flares in violence over the past two years, Bangkok and Phnom Penh have begun talking about de-escalating the situation and finding a compromise. The Association of South East Asian Nations, with Indonesia playing a leading role, has been instrumental in bringing the two sides to the negotiating table.

In late December Thailand and Cambodia agreed to simultaneously redeploy their troops from the disputed border area, and agreed to set up a working group to do so. Progress has been slow, however, and international observers were requested to oversee the process.

Indonesian military officials are still calculating the exact terms of their deployment but are expected to deploy within the next few months. They will work in joint teams with Thai and Cambodian observers along the disputed zone.

They will not, however, make any recommendations or decisions regarding the actual ownership of the border zone around the temple. The process of determining ownership will only start when troops have been withdrawn and military tensions are reduced.

Sources: Jakarta Post, AFP

China and India restart attempts to settle border

China and India have announced a new round of talks over their long and disputed border, following further tensions.

The new talks are not, strictly speaking, new – they are rescheduled from late November, when Beijing cancelled discussions over India's hosting of a conference attended by the Dalai Lama.

A host of issues are expected to be addressed in the fifteenth round of negotiations, which will be conducted by the respective Special Representatives Dai Bingguo and Shivshankar Menon. The land border between them, which is around 4,000km long, is disputed in both the west and the east. In the west, China does not recognise India's claims to Jammu and Kashmir; in the east, the two sides disagree over the status of the Indian state of Arunchal Pradesh.

India has also accused China of constructing military infrastructure in the border regions and boosting its troop presence there. Recently, a senior Indian general announced that in July 2011 Chinese forces damaged a wall along the border, which VK Singh dismissed as “a childish act” and said that in the event of a serious incident, “there will be enough noise and bloodshed and everyone will come to know”.

For some time the Special Representatives have failed to make headway on demarcating the border. Neither side appears to be willing to risk the political damage that would occur from compromising over territory. As border incidents remain rare, both Beijing and New Delhi seem to prefer to leave the status quo in place whilst they concentrate on building their bilateral relationship.

China has struck a conciliatory tone over the border, with Special Representative Bingguo insisting that disputes should be settled “wisely, calmly and properly”.

Sources: Times of India, Wall Street Journal

Iran, Saudi Arabia ink deal to develop joint oilfield

Iran and Saudi Arabia have agreed to develop a gasfield which straddles their mutual maritime border, a rare positive sign amid growing military tensions in the Gulf and other disputes over divided resources.

Iranian Oil Minister Rostam Qasemi said on 6th January that Tehran and Riyadh have already signed a deal to develop the Farzad A field, which is shared between them. They are also set to sign a deal on developing the nearby Farzad B gasfield as well as the Arash oilfield. Development plans for all three fields will be released before mid-March, according to the National Iranian Oil Company (NIOC).

The news about the Arash field is somewhat surprising: very recently, the Iranian government announced that it would begin unilaterally developing the field (which lies between Iran, Saudi Arabia and Kuwait) unless Kuwait finally agreed to joint development. That announcement followed a warning by a senior Iranian MP that Arab states were 'stealing' Iranian energy reserves from disputed fields.

Jointly developing the fields is part of an Iranian strategy to increase domestic gas and oil production in the face of tightening international sanctions. Iran is also rushing ahead with production on the giant South Pars field (shared with Qatar), where NIOC is working around the clock to bring subsequent production phases onstream.

Building a healthy working relationship with the Saudis will also help to reduce tensions between them over Iran's nuclear programme and its threats to close the Strait of Hormuz in reaction to any Western or Israeli airstrike. Iran's stance has alarmed Gulf Arab states, so working together on energy production will help to reassure Riyadh that Tehran is committed to a normal relationship:

Sources: Tehran Times, BBC