Exclusive Interview about the Gas Maritime Boundaries of the Oil and Gas Sector in Lebanon

February 2019 - Profesor John Paterson and Dr. Constatinos Yiallourdes shared their views and opinions with the LGOMP team about the Gas Maritime Boundaries of the oil and gas sector in Lebanon; also, their reflections on the 2 days workshops organized by AUT University in Beirut.

- Do you think that Natural gas will be the new cause for geopolitical conflicts in the East Mediterranean region? From this perspective, How do you look into the East Med region in general? And to its several maritime disputes in particular?

Experience shows that that what compels coastal States to delimit their maritime boundaries or, failing agreement on delimitation to achieve alternative practical arrangments of provisional nature, is their desire to proceed uninterupted to the exploration for and, in due course, to the exploitation of their offshore energy resource potentials. Over the past three decades, offshore hydrocarbon discoveries in the Eastern Mediterraean have prompted intense maritime activity in the region. Although some East-Med States were able to amicably determine their maritime boundaries (eg, Egypt and Cyprus, Cyprus and Israel, Cyprus and Lebanon), significant maritime spaces in the region remain undelimited, causing tensions amongst States (particulalry between Cyprus and Turkey and between Israel and Lebanon). In that sense, offshore oil and gas discoveries in the Eastern Mediterraean have become the tail that wags the dog of international maritime affairs in the region.

- The legal framework for maritime boundary conflicts is relatively clear; do you think that the practical difficulties are complex since the tension is very high between Lebanon and Israel? 

The political will of concerned States to overcome their boundary disagreements, whether through diplomatic means or other means of judicial nature, is a nessesary incredient for the peaceful and timely settlement of inter-State disputes, including disputes over maritime boundary delimitation. The case of Israel and Lebanon is not an exception to this. The responsibility to effect maritime boundary delimitation lies squarely with the govenements of the States concerned.

- The International Tribunal for the Law of the Sea (ITLOS) could determine the maritime boundary. Since only Lebanon is a member to UNCLOS, Israel would have to expressly agree to the jurisdiction of the ITLOS. Do you think that arbitration between Lebanon and Israel is yet another option that would also require consent by both States?

UNCLOS provides a code for the settlement of disputes, including disputes concerning maritime boundary delimitation. This code is embodied in Part XV of UNCLOS and prescibes the 'compulsory procedures entailing binding decisions'. These procedures include adjudicative bodies such as ITLOS, the ICJ and Arbitration. There is also an opportunity for States to refer their disputes to a Conciliation Commission whose decisions are not binding upon the parties, thus, allowing them to negotiate a solution based on the Conciliation Commission's report. Lebanon is party to UNCLOS but Israel is not. Israel would have to either become a party to UNCLOS or, alternatively, consent to the jurisdiction of one or more of the above bodies.

- In an interview to a Lebanese Newspaper in 2017, you insisted that the dispute between Lebanon and Israel over the 870-kilometer-long maritime stretch will not discourage the oil companies from drilling as long as they are far away from the contested areas. Do you still believe that this is the case? Or do you think that no exploration will take place until the disputed area conflict is resolved?

My sense is that the industry is able to distinguish areas of overlapping claim from those that are not contested. As such, I don't think a dispute in relation to one block should have an adverse affect on the progress of exploration in others. 

- If you can tell us more and inform our followers on media platform briefly on the 2 days course that will take place at the BBA end of this week: what are the main goals? Who are you targetting? And what are the expected outcomes? 

We are following up on an earlier course which introduced delegates to the fundamentals of the offshore oil and gas industry, the options for the state in terms of legal frameworks and an examination of the Lebanese approach in this regard. This course considers two more specific issues: international maritime boundaries and joint development of resources, and issues related to risk in the industry which are dealt with by contractual arrangements, such as joint operating agreements and specific risk allocation provisions. We are targeting lawyers in particular, but the course will be of interest to others who are keen to understand more about the way in which this industry operates in practice. We hope that by the end of the two days delegates will have a better understanding of some of the more complex issues that arise in the context of the offshore hydrocarbon operations and the way in which the law can be deployed to resolve or mitigate them.

- Why is it important for Aberdeen University CEL to be in Lebanon to give this course? And how do you look into the local O&G industry? Can you emphazise more on the role of the AUCEL?

We are keen to share our expertise and experience with lawyers in other countries (and of course to learn from them also). Our jurisdiction is now well in to the mature phase of offshore oil and gas operations and thus we have many lessons that we can share with others. We have also been privileged to work with colleagues from all over the world for many years and have learned much from them also. It is important for any country entering into this field for the first time that it draws as much as possible from the experience of others in order that in minimises the risks and maximises the opportunities.

- How do you look into the partnership between Aberdeen University, AUT and BBA? 

Our experience of working together so far has been very positive and we are keen to see what we can do in future.

- Will you be proposing or sharing possible legal solutions to the current Libano-Israeli dispute in the southern borders? Or comparing such dispute to previous similar experience worldwide? 

International law very much expects countries with overlapping claims in the maritime area to resolve these issues amicably, whether by agreement between themselves or by making use of the range of dispute resolution mechanisms that are available. This is by no means always easy, however, as a range of examples globally at the moment testify. It is not for us to recommend solutions, as we are not best placed to understand the particular issues in any given context. What we can do, however, is to indicate what international law says about this matter, how international tribunals have dealt with other cases and how other states have achieved mutually acceptable solutions. In this way, we hope people can be better informed about what possibilities exist.

You come from an international law field background with particular focus on the law of the sea, law of territory and natural resources law... From this perspective, How do you look into the East Med region in general? And to its several maritime disputes in particular? Do you believe that the several disputes are an indication of the Levant Basin's wealth? 

The oil and gas industry is always clear that until you drill a prospect you cannot know whether hydrocarbons in commercial quantities are present. The discoveries made in the area generally so far would certainly give one grounds for optimism, but this is a question best answered by exploration geologists. As to whether the disputes themselves point to the basin's wealth, I think the most that a non-geologist could say is that they indicate that states are aware of the potential wealth that may exist and are legitimately concerned to ensure that they maximise the area that they are entitled to under international law. 

- Lebanon is expected to start drilling in block 4 end of this year and then move to the disputed block 9... What's your advice for the country on this? And do you think that no drilling activity will take place without the resolution of the maritime dispute? 

My sense is that the industry will be reluctant to drill in areas where there is any doubt in this regard. Exploration activities are expensive and risky enough in normal conditions. That there may additionally be a doubt as to which state is the appropriate coastal state under international law is an additional problem that an investor would be keen to avoid.

What is your Message to Lebanese Students regarding the future of the oil and gas sector? 

The oil and gas sector globally is in an interesting phase. It is clear that our growing concerns with climate change mean that we need to move increasingly rapidly to low carbon energy sources. In an ideal world we would stop using fossil fuels tomorrow. If we did that, however, we would face a very considerable supply deficit. In such circumstances, it seems inevitable that fossil fuels will continue to play an important role in the energy mix for some decades to come. In that context, however, it will be increasingly important to consider which fossil fuels are used. For example, coal is more polluting that natural gas. We may also get to a point where we are more selective about which reserves are developed insofar as some are more easily produced than others and are less environmentally damaging in terms of their production. Finally, we are likely, it seems to me, to have to move much more quickly to carbon capture utilization and sequestration solutions in the period where we continue to use fossil fuels such as natural gas. None of these responses will be popular with those who are concerned that anything that suggests fossil fuels can be used in a non-harmful way should be avoided. But my analysis is based on the observation that energy security and affordability are pressing problems also. To be clear, however, all of this only makes sense in the context of a much more holistic energy policy that enjoys broad international support. That is not going to be easy to achieve. Nevertheless, I think it is inevitable and we may soon be forced into it. The generation studying in the energy field now will face the most demanding challenges ever.

Constantinos Yiallourides, reflection on the workshop:

My task during the workshop was to showcase the close interplay between maritime boundary delimitation and offshore oil and gas discoveries. We also addressed the role of international law in the settlement of disputes over maritime boundaries and the rights and duties of States pending the delimitation of their boundaries. Particular attention was paid to oil and gas related activities in undelimited maritime areas and alternative practical solutions of provisional nature pending delimitation. In analysing the relevant case law and State practice, we sought to draw reasonable analogies to the Eastern Mediterrean Sea context and pinpoint to possible State responses, including joint development and transboundary unitisation agreements. Participants greatly appreciated this approach and actively engaged in the discussions. 

Professor John Paterson, reflection on the workshop:

My section of the workshop was designed to introduce delegates to the complex risk matrix confronted by the oil and gas industry and the to consider some of the contractual arrangements used to cope with it. We started by examining joint operating agreements, went on to look at the issue of risk allocation in oil and gas contracts and concluded by considering farm-out agreements. There were excellent and insightful questions from the delegates which very much enhanced the value of the workshop. It was a pleasure to have the oppotunity to discuss these issues and I look forward to my next visit to Lebanon.
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