The Sunday Times FT - Legal regime in South Asia, oil and gas exploration

Since there is no continuous maritime boundary delimitation between the two countries in the specific areas demarcated by GOSL for bids there is a possibility that the blocks will either fall within the historic waters as well as the overlapping Exclusive Economic Zones of both India and Sri Lanka. The GOSL is calling for bids in a region either overlapping with the historic waters of the two countries or the EEZ’s of India and Sri Lanka which would also overlap and not presently agreed.

The marine legal regime established in South Asia is based on the UN Convention on the Law of the Sea. All countries in South Asia both maritime and land locked have either ratified and or acceded to this international ocean regime.

They should effectively interact to resolve issues related to ocean matters and ocean uses within the framework provided by the Convention.

An attempt is made in this article to highlight the issues that would emerge in Sri Lanka’s ambitious programme of both calling for international bids for demarcated blocks for off shore oil exploration in north west and south west of Sri Lanka covering the Gulf of Mannar by the Ministry of Petroleum Resources and the extension of the continental margin presently undertaken by the DECOM Project jointly under the Foreign Ministry and the Ministry of Fisheries and Aquatic Resources.

I shall first deal with the oil exploration in the western margin. In this regard it is relevant to look into the Maritime Zones Law No. 22 of 1976 which defined the territorial sea as 12 nautical miles measured from defined baselines on shore at low water mark and a contiguous zone for law enforcement as 24 nautical miles measured from the same baselines. Further the Presidential Proclamation, issued a year later, also declared an Exclusive Economic Zone (EEZ) and a Pollution Prevention Zone extending to 200 nautical miles measured from the same baselines as above. Attention is also drawn to Section 10 of this law where the Surveyor General had to publish charts or maps giving the coordinates of these maritime boundaries.

The above law also defined the boundary between Sri Lanka and India after reaching agreement with India. The boundaries based on historical waters have fixed latitudes and longitudes on positions of baselines. Such definition of the boundary off shore was from Palk Strait to Adam’s Bridge, Gulf of Mannar and in the Bay of Bengal.

According to the Department of Ocean Development of India, Sri Lanka and India agreed on 28 June 1974 to the delimitation of the boundary through historic waters of Palk Bay

The coordinates have been defined and published in the Indian government’s notice to mariners. It took nearly two years for the legislation of the law after reaching agreement with India in 1974. Special reference is made to the Sri Lanka- India Maritime boundary in the Gulf of Mannar. It is stated that “the Extension of the boundary beyond position 13 m (Lat.North 05 00.0’ Long East 77 10.6’ will be done subsequently. Agreement was reached on 22 November 1976 to extend this boundary in the Gulf of Mannar to the Triple Point which is the maritime boundary of the three countries namely India Maldives and Sri Lanka. However this Triple Point is included in the Agreement between India and Maldives but the Agreement itself has not been ratified as of 1978.

The GOSL has not amended the Maritime Zones law No 22 of September 1, 1976 nor in the Presidential Proclamation of January 15, 1977 in pursuance to the Law to reflect the extension to the boundary in the Gulf of Mannar. Moreover the legality of the triple Point is now questionable as the above Agreement between India and Maldives has not been ratified. Also the coordinates between the position 13 m and Triple Point have not been determined and there is a break in the continuity of the maritime boundary between India and Sri Lanka in the Gulf of Mannar.

Now we shall examine the implications the above on the demarcation of off shore blocks by GOSL for calling international tenders.

The GOSL is calling for bids in a region either overlapping with the historic waters of the two countries or the EEZ’s of India and Sri Lanka which would also overlap and not presently agreed.

The above uncertainty is due to the fact the GOSL did not take appropriate action to clearly define the maritime boundary and the EEZ south in the Gulf of Mannar up to the Triple Point as well as north to the Bay of Bengal. However in an analysis made by the United States in 2005 it is stated “further negotiations between the two States have begun to extend the maritime boundary eastwards to the Bay of Bengal and southwards through the Gulf of Mannar.

The waters of the latter are also deemed to be ‘historic’ by both India and Sri Lanka.” It is not known whether the GOSL and India initiated such negotiations apart from the extension of the boundary in the Gulf of Mannar.

Total length of the maritime boundary between India and Sri Lanka as presently agreed is 85.375 nautical miles.

Due to the above we shall now examine the off shore oil and gas prospects in the Cauvery Basin that extends through the Palk Bay through the Palk Strait to the Gulf of Mannar. India Oil Ltd and Oil and Natural Gas Commission have entered into a joint venture with the Indian government for a PSC for exploration in a large block in the Gulf of Mannar. The location of this block will be close to the blocks to be auctioned by GOSL or may even overlap. This Block is identified as CY_DWN-2001/1.Further the other Blocks now under production in the area north of Palk Bay are CY –OS 90/1 (PY3) Field 6269 BOPD (Barrels of Oil Per Day) and Block PY1 Gas . CY-OSN-97/1 is a major Exploration Block immediately north of Palk Bay where drilling commenced in May 2006.

It is therefore inferred that GOSL has been too late in calling for bids for the identified blocks on the northwest off shore area covering the historic waters.

Another serious drawback of the Maritime boundary agreement with India is that there is no provision for sharing of oil and gas resources if found in a common basin straddling the off shore jurisdiction of the two countries.

Such a legal requirement is included in clause 5 of the Maritime Boundary Agreement India signed with Maldives in 1976.

This clause states “If any geological petroleum or natural gas structure or field or any geological structure or field of any mineral deposit including sand and gravel extends across the boundary referred to In Article 1 (coordinates given) and a part of the structure or field which is situated on one side of the boundary is exploited, in whole or in part, from the other side of the boundary, the two countries shall seek to reach agreement as to the manner in which the structure or field shall be most effectively exploited and the manner in which the proceeds derived therefrom shall be apportioned.”

If such a clause was included in our law and negotiated with India, Sri Lanka would have had a share from the productive oil and gas fields within the Gulf of Mannar and the Palk Strait as all these major fields are within the same basin straddling the two countries namely the southern extension of the Cauvery basin.

I shall now very briefly deal with another Project identified as DECOM (Delimitation of The Continental Margin). This project that was given wide publicity at the commencement in 2003 has not been transparent regarding its activities.

The Project is under the Ministry of Foreign Affairs and the Ministry of Fisheries and Aquatic Resources and is headed by a Director. The Project Office is housed at NARA.

There is a budgetary allocation of Rs. 85 million as the local component which is expended from the votes of the Ministry of Fisheries and the foreign component is US $ 6.18 million (Rs 618 million) entirely funded by Norway under a Technical Assistance Agreement. Out of this US$ 3.7 million (Rs 370 million) has been allocated for acquisition of 2 D seismic data, refraction seismic data, gravimetric and bathymetric data.

The project is for 3 years and should terminate at the end of 2006. The general public has every right to know what activities that have been completed.

It was reported in a weekly newspaper about 3 years back that a sum of US$ 120 000 was given direct by the Norwegian Embassy in Colombo to a Sri Lankan who is a naturalized Norwegian for the preparation of the DECOM Project and this report should be available at NARA or the GSMB. It is also reported that the above individual of this Norwegian company was paid an honorarium of US$ 90 000. This same individual is now a consultant to the DECOM Project appointed by Norway!!

It is reliably learnt that a tender was awarded by DECOM to a company based in Singapore for the off shore surveys in early 2006 but was not signed as the company had some problems with the offshore vessel hired for the survey.

It is now learnt that fresh tenders are to be called for this survey and a Professor of Physics has been appointed as the Chairman of the Procurement Board.

It must be emphasized that the work carried out by DECOM is the same as what the TGS NOPEC did for the CPC mainly to determine sediment thickness over the off shore areas in the northwest as well as south west off shore area of Sri Lanka. Accordingly there was a duplication of efforts.

The DECOM Project has been justified by the fact that under Annex 2 of the Final Act of the United Nations Law of the Sea Convention titled “Specific Method to be Used in Establishing the Outer Edge of the Continental Margin” the determination of such a margin is established by straight lines not exceeding 60 nautical miles connecting fixed points where sediment thickness is not less than one km. However this method may be utilized by the adjoining State to demarcate its continental margin if on a common geological feature. This method specifically applies to the Bay of Bengal where the common geological feature is the Bengal Sea Fan. The States involved are India, Bangladesh and Sri Lanka.

The technical data has to be submitted to the UN Commission on the Limits of the Continental Shelf. Sri Lanka had informed the Commission that its technical data will be submitted in 2007 but this is not possible as the work has not been completed. In any case there is no deadline but governments have been informed by the Commission to make every effort to submit such data by 2009.

India will submit the data and stake its claim in 2009 when Sri Lanka will have to negotiate with India after the Commission first examines the technical data and finds that it is appropriate and adequate. The States concerned will not lose its right for a claim to the extended seabed by not keeping to the deadline as reported in some quarters.

It is predicted that such negotiations will be long drawn out and eventually India will have the advantage over Sri Lanka as even now India has a vast database on the sediment thickness of the Bengal Sea Fan.

Moreover India has maritime boundary agreements with Myanmar, Indonesia and Thailand that will encompass parts of the Bay of Bengal. India has also given exploration licenses to a large number of consortiums covering parts of the Bay of Bengal and recently Bangladesh complained that India has encroached into its territorial waters. I would like to draw the attention to Article 83 Para 3 of the UNCLOS where there is provision for States to enter into practical arrangements without hampering the final agreement on the demarcation of maritime boundaries including continental margins.

The legal concept of Joint Development could be identified as such arrangements. It is a mechanism to share the off shore oil and gas in a designated zone of the seabed. If such an arrangement was pursued by the GOSL we would have Joint Development Zones in the Gulf of Mannar with India beyond our historical waters as well as in the northeast off shore areas.

In conclusion it must be stated the location of the off shore blocks in the areas of Palk Strait and the Gulf of Mannar should be checked and confirmed that these are within our maritime boundary. It must also be stressed that any deep-water blocks should be within the maritime boundary demarcation and not within the overlapping EEZ with India.

India is already carrying out extensive surveys in the Gulf of Mannar as well as the area immediately north of Palk Bay. Sri Lanka is at a disadvantage as no proper demarcation of the EEZ in these areas has been carried out with determination of coordinates at points on straight baselines. This precludes even the identification of overlapping EEZs of India and Sri Lanka.

Moreover Sri Lanka did not have the foresight to include a clause as indicated in the agreement between the Maldives and India where we could have shared the output of oil and gas from the same basin common to the two countries.

As regards to the DECOM Project the GOSL should closely coordinate with India for acquisition of the geophysical data and preferably submit a joint claim to the United Nations Commission on Limits on the Continental Shelf and initiate Joint Development Zones for oil and gas exploration.

(The author is a retired Economic Affairs Officer, United Nations ESCAP who was in charge of the Marine Affairs Programme and could be contacted at fasttrack@eol.lk )