September 20, 2007

Guyana Awarded 13,000 Square Miles of Oil-Rich Coastal Waters

Rigzone

Guyana's lead counsel, Paul Reichler, a partner in the Washington office of law firm Foley Hoag LLP, says the ruling, which comes three and a half years after Guyana initially filed for arbitration, fortifies the role of international tribunals in adjudicating sovereignty disputes. According to Mr. Reichler, arbitrated settlements of international boundaries are rare occurrences, despite the large number of disputed maritime boundaries around the world.

According to the terms of the tribunal's ruling, Guyana gains sovereignty of some 12,837 square miles of the coastal waters; Suriname receives its own portion, of approximately 6,900 square miles.

"This is a hugely important win, not only in upholding Guyana's claims to its coastal waters, but in maintaining international law as a peaceful solution to resolving sovereign disputes," said Mr. Reichler. "The ruling could become an important model for settling other maritime delimitation conflicts, since the sad fact is that there are more disputed maritime claims around the world than there are settled maritime boundaries."

The formerly disputed waters, part of the Guyana Basin, are reportedly rich in oil and natural gas deposits. Both Guyana and Suriname agreed to abide by the tribunal's ruling, and as a result both nations can also now proceed in further exploration of their respective ocean territories.

Guyana and Suriname are located side by side on the northeastern coast of South America, between French Guiana and Venezuela. The exact position of the ocean boundary between them had long been a subject of disagreement, but did not erupt into real conflict until exploratory tests revealed potentially huge energy deposits beneath the sea bed. Suriname had asserted a boundary further to the north and west, while Guyana had relied on the more widely accepted "equidistance line" method of determining the boundary, which placed it further to the south and east. The result was a cone-shaped area of uncertain sovereignty with its apex at the mouth of the Corentyne River, which separates the two nations.

International law regards the first 12 miles of sea off a nation's coast to be its sovereign territory, no different from land. The next 188 miles are considered an Exclusive Economic Zone (EEZ), wherein the coastal nation enjoys sole rights to all ocean resources, although vessels from other nations may pass through.

In 2000 Guyana licensed CGX Energy, Inc., a Canadian oil and gas company, to operate a drilling rig within the disputed waters. In June 2000, a gunboat of the Suriname navy forced the oil rig workers to evacuate. Thereafter, international petroleum concerns were suspended in that part of the Guyana Basin, awaiting resolution of what seemed an increasingly intractable territorial disagreement.

Annex 7 of the United Nations Convention on the Law of the Sea provides for compulsory arbitration if one party to a dispute seeks it. In 2004, after a fruitless search for a negotiated settlement, Guyana filed for arbitration; as a fellow signatory of the Convention, Suriname had to accept. The case was heard by a panel of five experts in maritime law, at the seat of the Permanent Court of Arbitration in The Hague, the Netherlands. Final arguments in December 2006 were held at the headquarters of the Organization of American States in Washington, DC.

Referencing Suriname's threatened military action against Guyana for exploring the waters, the 181-page tribunal ruling states, "Guyana now has undisputed title to the area where the incident occurred."

In addition to finding for Guyana regarding the boundary dispute, the arbitral tribunal found Suriname in breach of international law for resorting to the threat of violence against the CGX drilling rig.

In a speech broadcast nationally in Guyana on September 20, President Bharrat Jagdeo said, "The Award has taken Guyana's major arguments fully into account, and now allows our licensees to resume their petroleum exploration activities in the part of the sea that Guyana has claimed, in accordance with international law. The great achievement of the Award is to open up before Guyana and Suriname the prospect of practical harmonious cooperation in their economic development and in their relations as good neighbors."