The Egyptian Natural Gas, New Legal Challenges over the East Mediterranean Gas

No one can deny that natural gas plays a vital role in all aspects of our life today. This proved apparent especially after the great industrial developments witnessed by the international sector that based solely on non-renewable energy, as a means to satisfying their intensive industrial needs. Although most developed countries exert thier best efforts to find alternatives ways instead of traditional means, they failed to get rid of oil and gas as a main source of Energy. Consequently all countries are aiming at achieving progressive steps to explore petroleum resources throughout its national or foreign petroleum companies. The war today indeed has become a war over oil and gas.

New legal Challenges over the East Mediterranean Gas
The United States Geological survey has issued its report pertaining the undiscovered oil and gas in the Nile Delta region. It served as a part of a program aimed at estimating the recoverable oil and gas resources of priority basins around the world. The USGS estimated a mean of 1.7 billion barrels of recoverable oil and a mean of 122 trillion cubic feet of recoverable gas in the Levant Basin Province. The Levant Basin Province encompasses approximately 83,000 square kilometers of the eastern Mediterranean area.

The above mentioned area is bound to the east by the Levant Transform Zone, to the north by the Tartus Fault, to the North by the Eratosthenes Seamount, to the west and south west by Nile Delta Cone Province boundary, and to the south by the limit of compressional structures in Sinai.

This data about the estimated reserves of recoverable oil and gas may lead to a struggle between the adjacent coastal states of this region. Egypt, Israel, Lebanon, Syria, Cyprus and Turkey are expected to explore and exploit oil and gas in the East Mediterranean Sea. They plan to control these huge reserves which may change the world energy map and would have great influences on the economic status of the involved countries.

In 2003 Egypt signed a border delimitation agreement with Cyprus for the exclusive economic zone of both countries. The agreement stated that the Economic water of each country shall extend beyond the median line where every point is equidistant from the nearest points on the baselines. The breadth of the economic water of each of the two states is measured consequently; hence there are no rights for any third country interference between Egypt and Cyprus.

Despite the redetermination agreement signed between the Egypt and the Cyprus, The latest has signed an agreement for Border determination with Israel In 2010. Israel announced a huge commercial gas discovery, 2500 meter in depth, in the East Mediterranean Area in the Well Leviathan. Despite the advisory results this well is at the same depth as that of the undeveloped Egyptian one drilled by Shell. Furthermore in April 30 2012 Israel announced a new commercial discovery for gas in Shamshon field at 1086 meter south Leviathan.

These discoveries are located in the south of Eratosthenes Seamount 235 km away from Israel and 191 km from the Egyptian coast. This case may raise a matter of interference and vagueness between the Egyptian side and Israel regarding natural resources in gas fields especially where there is no agreement for the determination of the maritime borders.

Exploitation of natural resources according to the provisions of international law.
Digging  deeper into the international relationship between two or more countries, we should bare in mind the provisions of international maritime law that ultimately govern the relationship between the countries with regards to the exploitation of their natural resources in the sea bed.

Furthermore in 1982 The United Nations Convention on the Law of the Sea signed the principal source of the international maritime legislation. This source clearly identifies the relationship of the countries’ right to the exploitation of the maritime natural resources which include oil and gas resources. This convention is a codification of international practice and customs in the usufruct of seas and oceans and their exploitation. It is primarily based on equity and fair principles to ensure the safety of maritime environment.

Article 3, 4 of The United Nations Convention on the Law of the Sea stipulates that “Every state has the right to establish the breadth of its territorial sea up to a limit not exceeding 12 nautical miles, measured from base lines determined in accordance with this convention. The outer limit of the territorial sea is the line every point of which is at a distance from the nearest point of the base line equal to the breadth of the territorial sea”.

Part V of the UN convention, Article 55 and subsequent articles, deals with the coastal states rights, authorities and obligations in the exclusive economic zone.
The exclusive economic zone is an area beyond and adjacent to the territorial sea in which the coastal state has sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources. The Exclusive Economic Zone shall not extend beyond 200 nautical miles from the base lines from which the breadth of the territorial sea is measured.

On March 30, 1982 Egypt signed The United Nations Convention on the Law of the Sea. The convention played a major role in the Egyptian internal legal system allowing Egypt  to bear all liabilities and benefit from all the rights recognized by the convention.

Although Israel in context can be labeled as an “invader”, it does takes full advantage  and quick steps in monopolizing and controlling the petroleum reserves in the east Mediterranean zone.. However with no regard to adjacent countries this eventually may have a negative effect on the Egyptian economic rights in two aspects;

First: As long as there is no determination agreement between Egypt and Israel, and no obvious marks of the maritime borders between them thus the situation might be misused by Israel. Eventually leading to a violation of the Egyptian gas reserves throughout the exploration survey and production activities in the Egyptian exclusive economic zone.

Second: due to the existence of natural petroleum, the liquidity of petroleum does not respect man-made boundaries. It is highly mobile and has rightfully been described as a foreign figure emigrating from areas of high-pressure area to low-pressure. A consequence of such abnormality can lead to a dispute where landowners begin tapping and producing into one another’s’ land. Alternatively, joint development and trans-boundary unitization is designed, inter alia, to preserve the unity of such deposits while respecting the inherent rights of Egypt.

On October 1974 The United Nations General assembly issued the decree NO 3018 regarding the establishment of an international economic regime based on equity between states and the permanent sovereignty of each state over its natural resources and wealth.

Accordingly,  if any state begins exploitation of any petroleum field and extends its structure to any contingent state territory, such state will be held liable for any harmful effects that occur to the contingent state. Such transaction shall be considered an abuse of authorities which is a main principle of the current international law.

In order to protect our rights over the East Mediterranean gas, Egypt is adviced to move rapidly towards mutual cross border unitization agreement alongside any adjacent or contingent countries in case of interference of petroleum structures. Article 74 of the United Nations Convention on the law of the sea stipulates that “The delimitation of the exclusive economic zone between states with opposite or adjacent coasts shall be effected by agreement on the basis of international law, as referred to in Article 38 of the Statute of the International Court of Justice, in order to achieve an equitable solution”.

If no agreement can be reached within a reasonable period of time the states concerned shall resort to the procedures of international arbitration.

The Egyptian authorities must pay great attention to the situation and eventually form a solid domestic team whom shall study all legal and technical aspects of the maritime border determination with Israel. This determines accurately the Egyptian rights over its Exclusive Economic Zone and avoids any violations occurring directly by Israel. It also prohibits avoid Israel from the solely exploiting extended structure gas fields in the East Mediterranean area.

Furthermore, Egypt must urgently invite petroleum companies to participate in a competitive bid and present incentives for the foreign investor. Such incentives will help develop our gas wealth in these areas. I think this would be the best way to keep our wealth protected and to achieve sustainable development for our country throughout our natural resources.

By: Mostafa El Shazly . Attorney at law, EGPC Petroleum agreements Department, Member of AIPN


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