We are back with the Penplusbytes Online Discussion on Oil and Gas which is part of the “Empowering the Media to Play an Active Watchdog Role over Ghana’s Oil and Gas Revenues and Resources” project. This latest discussion, holding from Today Thursday April 16 to Wednesday April 29, 2015, is on the simmering international coastline dispute between Ghana and western neighbour Ivory Coast.
As many of us may already be aware, an interim decision relating to a request for provisional measures filed by Côte d’Ivoire is expected this month.
This follows a two-day round of oral arguments at the International Tribunal for the Law of the Sea (ITLOS) at the end of March during which legal representatives of both countries rendered arguments to a special five-member chamber.
You may recall that in September 2014 Ghana filed a suit against Cote d’Ivoire after years of disagreement over the maritime boundary between the neighbours.
The area under reference is the Tano basin, a proven petroleum basin with a prolific hydrocarbon play potential holding an estimated 8 billion barrels of oil equivalent potential. The disputed area covers portions of the Jubilee Field, Tweneboa, Enyenra, the Owo discoveries, West Tano-1X find and the deep-water Tano block in Ghana’s territorial waters. Tullow, Kosmos, Vanco and others are exploring for commercial oil plays in this ultra-deepwater terrain.
Ghana, in the suit, is seeking a declaration that it has not encroached the territorial waters of Ivory Coast in the exploration of oil. The arbitration process, under the UN Convention on the Law of the Sea (UNCLOS), is before a Special Chamber of the International Tribunal of the Law of the Sea (ITLOS) in Hamburg.
Ivory Coast responded in March 2015 with an application for provisional measures made to the ITLOS to stop Tullow oil and other oil companies from exploring and exploiting oil in the disputed area.
It is claimed that it had previously issued threatening letters to oil companies operating in the disputed area.
Prior to this, Ivory Coast had, in 2010, petitioned the United Nations to complete the demarcation of the Ivorian maritime boundary with Ghana days after the American exploration firm Vanco discovered oil in the Dzata-1 deepwater-well.
Subsequently, the two countries constituted a joint committee to address the matter but no headway was made.
One of the strongest fears expressed so far relates to the effect of the wrangling on field operations of Tullow Oil plc in particular as it is expected to commence its work on the Tweneboa-Enyenra-Ntomme (TEN) project on the offshore Deepwater Tano block.
The TEN project remains key to Ghana’s medium term energy security goals as gas from the field is expected to significantly contribute to thermal power generation as the nation weans itself of supply from the ever unreliable West African Gas Pipeline (WAGP).
In early March, it was reported that Tullow lost over 200 million pounds ($308 million) of its market value as it was hit by concerns that the boundary dispute could delay its project in the area.
This is in spite of the company expressing confidence that Ghana has a strong case and that work on the TEN project continues and remains on schedule and on budget for first oil in mid-2016, more than a year before ITLOS is expected to give a verdict in the maritime border dispute case.
Ghana President and ECOWAS Chair John Dramani Mahama also assured in the State of the Nation address of February 26, 2015 that: “Gas supplies are expected to rise in 2016 when production begins in the TEN field. Just 3weeks ago I witnessed the sign of an agreement to begin work on the ENI/Vitol Sankofa field into operation. This investment is worth $7 billion and is reportedly the single biggest investment signed in recent history. The operationalization of TEN and Sankofa will bring Ghana’s gas production to above 300 mscf daily ,” the President said.
Meanwhile, Tullow remains confident that a decision on Ivory Coast’s application for provisional measures should be handed down before the end of April 2015.
Until 2010 when the Ghana Boundary Commission Act was passed by Parliament under a certificate of urgency Ghana had not made any effort to settle its maritime borders with any of its coastal neighbours as a result of which future disputes remain a possibility between Togo and Benin as well .
Being a coastal State Ghana has certain rights under international law over the adjoining sea. The maritime boundary determines the area (sea water, seabed, ocean floor and subsoil) over which Ghana can freely exercise its sovereign powers and economic rights without interference from another state.
Ghana has total authority and jurisdiction over what is called the territorial sea measured 12 nautical miles from the coast into the sea. The territorial sea is adjoined by the contiguous zone which is measured 24 nautical miles from the baselines from which the breadth of the territorial sea is measured.
There is also the exclusive economic zone which is measured 200 nautical miles from the baselines from which the breadth of the territorial sea is measured. The seabed and subsoil of the area covered by the exclusive economic zone is what is referred to as the continental shelf.
Undoubtedly, a number of questions arise.
• First, is this a case that Ivory Coast is using the petition as an attempt to lay claim to Ghana’s oil?
• What’s the price to pay for both nations?
• Should the Ivorians win the preliminary hearing at the Tribunal, the TEN project could face an almost two year hiatus. What should be the alternatives government should begin to consider?
• Again, there are significant risks should the substantive case go the way of the Ivorians. What then should happen to investment costs, project delays, legal issues, new contracts, etc?