MATRICULATION NUMBER:

080601131

COURSE CODE:
JIL 402

COURSE TITLE:
OIL AND GAS LAW I

LECTURER:
DR. AYOADE

QUESTION: HOW THE LAWS OF THE SEA AFFECTS

THE NIGERIAN OIL AND GAS INDUSTRY

Introduction
The sea is the lifeblood of any country – and indeed of any continent. There is hardly an alternate
means of transport or import and export given the nature of Africa and its inadequate overland
infrastructure. The present rate of degradation of the road systems in Nigeria has ensured coastal
trade’s growth for and indeed coastal transport.

The thesis of this paper is to discuss how the laws of the sea has affected the Nigerian Oil and
Gas industry while considering necessary steps to be taken for higher efficiency and
effectiveness. A brief overview of the history of these factors is needed to fully understand the
background of these components

HISTORY AND BACKGROUND

Nigerian Oil and Gas Industry

There had been a regulatory framework on the petroleum laws of which oil and gas is inclusive.
Before there were any attempts made to find oil in Nigeria, there existed the Petroleum
Ordinance of 1889 followed by the Mineral Regulation Ordinance of 1907 which stipulated that
only British subjects would be eligible to explore for oil resources.

Oil and gas operations commenced in Nigeria effectively in 1956, with the first commercial find
in that year by the then Shell D’Arcy. This dominant role of Shell in the Nigerian oil industry
continued for many years, until Nigeria’s membership of the Organization of Petroleum
Exporting Countries (OPEC) in 1971, after which the country began to take a firmer control of
its oil and gas resources, in line with the practice of the other members of OPEC.

LAWS OF THE SEA

The oceans have long been viewed by societies as a wide-open free space—a vast frontier
associated with adventure and mystery. In the seventeenth century, nations formalized this
viewpoint into the Freedom of the Seas doctrine. This doctrine limited any nation's rights to the
ocean to a narrow belt, traditionally 4.8 kilometers (3 miles), surrounding its coastline and
declared the rest of the seas to be free to all nations and belonging to no one. This doctrine
formalized views that the seas were such a vast resource that all nations could use them as they
wished.

Due to the freedom of seas doctrine, the exploitation of the open seas led to multifaceted
problems. This includes pollution caused by oil spills, dumping of hazardous waste and
reduction in migratory fish caused by large fishing fleets. This resulted in many states such as the
United States, Argentina, Chile, and Peru to arbitrary claims over the open seas.

United Nations Conference on the Law of the Sea.

In 1967, Arvid Pardo, Malta's ambassador to the United Nations, called on the nations of the
world and pleaded for "an effective international regime over the seabed and the ocean floor
beyond a clearly defined national jurisdiction”. It was in response to this that the UNCLOS III
which is possibly the most significant legal instrument in the 20 th century came about. As a
result, the treaty became an all-encompassing law that addressed various issues that relates to
various maritime issues. These include innocent passage, criminal jurisdiction, control of
resources, defenses etc. However, only those relevant to this essay shall be exposited.

THE UNCLOS and its significance to the Oil and Gas industry

Article2 establishes the sovereignty of a state over its territorial sea, the air space over the
territorial sea and of its bed and subsoil. It provides that the sovereignty extends beyond its
territorial waters to the adjacent belt of the sea known as territorial sea. According to Article 2
(2) the sovereignty extends to the airspace over the sea as well as its sub-soil. This is the section
which gives Nigeria as a sovereign country the authority to give out licenses for the drilling and
exploration of the sea bed.

Article 3 establishes the breadth of the territorial sea as being up to a limit not exceeding
12 nautical miles, measured from baselines determined in accordance with this Convention. This
clause has the effect of limiting the amount of natural gas and oil we own by putting a restrictive
boundary of not more than 12 nautical miles. Other relevant articles include:

Article 56

In the exclusive economic zone, the coastal State has sovereign rights for the purpose of exploring and
exploiting, conserving and managing the natural resources, whether living or non-living, of the waters
superjacent to the seabed and of the seabed and its subsoil, and with regard to other activities for the
economic exploitation and exploration of the zone, such as the production of energy from the water,
currents and winds; this enables Sovereign states to construct or give licenses out to establish offshore
installations which would enable offshore explorations possible.

This article is responsible for the country’s exploitation of petroleum resources upon the seabed
and the subsoil, areas rich in petroleum.

Article57

The exclusive economic zone shall not extend beyond 200 nautical miles from the baselines from which
the breadth of the territorial sea is measured.

As a result of this Article, Nigeria has been limited in her exploitation of oil and gas resources
from an unlimited perimeter, to a distance of 200 nautical miles.

Article74

1. 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.
THE TREATY BETWEEN NIGERIAN AND EQUATORIAL GUINEA

Article 1
The purpose of this Treaty is to establish the partial maritime boundary between the Federal Republic of
Nigeria and the Republic Of Equatorial Guinea described in Article 2, and provide for the remainder of
the maritime boundary in accordance with Article 3

From the above Article one would deduce that the treaty is concerned with the delimitation of
maritime boundaries as stipulated in UNLCOS via Article 15 and 74. However, other provisions
of the treaty would suggest that the treaty also deals with the exploitation of petroleum and other
resources. These include

Article 4
North and west of the maritime boundary established by this Treaty, the Republic of
Equatorial Guinea shall not claim or exercise sovereign rights or jurisdiction over the waters
or seabed and subsoil. South and east of the maritime boundary established by this
Treaty, the Federal Republic of Nigeria shall not claim or exercise sovereign rights or
jurisdiction over the waters or seabed and subsoil.

From the above, the territorial boundaries set out in the treaty also extend to the resources
exploited in the area. Therefore if the underground oil field flows from one territory to another,
the migration automatically changes the ownership of the resource. Accordingly, if the oil field
should find origin in Nigeria, she would lose ownership over the resource.

Article 6
1. Should the maritime boundary established by this Treaty run through any field of
hydrocarbon deposits so that part of the field lies on the Nigerian side of the boundary and part
lies on the Equatorial Guinea side, the Contracting Parties shall seek to reach appropriate
unitization arrangements for each such field.

In conjunction with that mentioned above, shall the field of hydrocarbons run through both
territories, a unitization contract would have to be reached before exploitation of the resource
may be undertaken. Accordingly, should the underground oil field belong to Nigeria, she losses
absolute ownership and would have to settle for that which is agreed upon within the contract.

TREATY BETWEEN THE FEDERAL REPUBLIC OF NIGERIA AND THE

DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE ON THE JOINT
DEVELOPMENT OF PETROLEUM AND OTHER RESOURCES, IN RESPECT
OF AREAS OF THE EXCLUSIVE ECONOMIC ZONE OF THE TWO STATES 21
FEBRUARY 2001
This treaty was entered virtue of the provisions of UNCLOS in order to promote international peace and
stability in the administration of maritime resources. Accordingly, there are various provisions however
only those relevant to this thesis shall be exposited below.

Article 2

2.1 The Zone is hereby established as an area of joint development by the States Parties in accordance
with, and for the purposes set out in, this Treaty.

This Article establishes the zone to which the two countries shall jointly exploit subject to the provisions
of the Article.

Article 3

3.1 Within the Zone, there shall be joint control by the States Parties of the exploration for and
exploitation of resources, aimed at achieving optimum commercial utilization. The States Parties shall
share, in the proportions Nigeria 60 per cent, São Tome and Principe 40 per cent, all benefits and
obligations arising from development activities carried out in the Zone in accordance with this Treaty.

By virtue of this Article, the division of resources shall be appropriated at ratios mentioned above.
However, as mentioned earlier in this article, oil fields that find their origins in respective states would
then have to be appropriated subject to international agreements and not premised on the fact that due to
the origin of the resource, absolute ownership should be placed upon the state within the resource is
found.

Article 23

23.1 No petroleum activities may be undertaken in the Zone other than pursuant to a petroleum
development contract between the Authority and one or more contractors.

As a result of the above provision, it would mean that exploitation of the resources would be subject to
the Authority. Therefore if Nigeria should hold prejudice to a particular contractor and the Authority
should not assent to forming a contract, Nigeria losses out. This can be seen as affecting Nigeria’s
resources as she no longer can freely exploit the resources in the zone.

NIGERIA’S LEGISLATION ON PETROLEUM

Nigeria’s oil and gas resources have evolved over the past few decades. The principal statute governing
the exploitation of petroleum resources in the country is the Petroleum Act of 1969 1, followed by a series
of regulations including the Minerals Oils (Safety) Regulations., Petroleum Regulations, Petroleum
(Drilling and Production) Regulations, and the Petroleum Refining Regulations. Other statues include
Oil Pipelines Act of 1956, Petroleum Profit Tax Act 1959 and Oil in Navigable Waters Act, and
contiguously, the Territorial Waters Act. These statutes however did not undergo fundamental change,
1
but rather were amended to accommodate the new changes induced by UNCLOS. This change is most
related in Section 1(1) of the Territorial Waters (Amendment) Decree 1971 which set the breath of
Nigeria’s territorial seas at 30 nautical miles as opposed to the generally accepted 12 nautical miles
stipulated in Art.3 of UNCLOS. At the time, the provision was to serve as a further preventive measure
of civil unrest or violence, following the aftermath of the 1967 Nigerian Civil War. It has however been
amended virtue of the Territorial Waters (Amendment) Decree 1998, whereby it states in the following
section;

2. Section 1 of the principal Act is amended as follows:

(a) In subsection (1), for the word “thirty” there shall be substituted the word “twelve”;

(b) By deleting subsection (3)(a) thereof and inserting a new subsection (3)(a).

CONCLUSION

In view of the extension of exploitative waters and limitations as regards overlapping territory it is
obvious that the UNCLOS has played a vital role as regards Nigeria exploitation of her oil and gas
resources.