Territorial delimitation and hydrocarbon resources

exploration and exploitation, two classes of activities in disputed waters are therefore
permissible. The first comprises activities undertaken by the parties pursuant to
provisional arrangements of a practical nature. The second class is composed of acts
which, although unilateral, would not have the effect of jeopardizing or hampering
the reaching of a final agreement on the delimitation of the maritime boundary.68
The tribunal went on to explain that unilateral acts which do not physically change
the marine environment generally fall into the second class, but anything involving
a physical change may only be undertaken pursuant to an agreement; a party to a
dispute should not undertake any unilateral activity that might affect the other
partys rights in a permanent manner.69
As a result, where a company is operating in disputed waters, according to the
Guyana v Suriname arbitration it should only carry on activities which do not involve
physical change, such as seismic operations. If a company goes beyond this and
carries on exploration activities, there is a risk that it would be in breach of
international law, since exploration of oil and gas reserves falls within activities
which involve physical change in the seabed or subsoil.
Oil and gas companies are therefore not only subject to the laws and regulations
of the host state and the terms and conditions of their contracts, but they will also
have to bear in mind that if they are operating in disputed waters, certain activities
may not be permitted as a matter of international law, in accordance with the
requirements set out in the Guyana v Suriname arbitration.
8.4

Prohibition of the use of force

If a company does find itself operating in a disputed area, the claimant neighbouring
state should not use force against the company, since this would be in breach of
international law. In the Guyana v Suriname case, the tribunal found that the
expulsion by Suriname from the disputed area of the commercial oil rig and drill
ship, which were operating further to a concession granted by Guyana for oil
exploration in the disputed area, constituted a threat of the use of force in breach of
the Convention, the UN Charter and general international law, and also threatened
international peace and security, jeopardising the potential for reaching agreement
on delimitation.70

8.5

Contracting with both states

Oil and gas companies can consider the possibility of contracting with both the
original host state and the claimant neighbouring state. In practice, however, this is
often not a realistic option, since each state may believe it has a legitimate claim to
the whole contract area and there may also be political objections, particularly if the
states do not have friendly relations. Given the financial stakes involved and the
potential loss of revenue from a reduced contract area, states may be reluctant to be
part of such an arrangement.

68
69
70

Above at note 7, at para 466.

Above at note 7, at paras 467 and 470.
Above at note 7, at paras 484 and 488(2).

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