CHAPTER
IX - Petroleum Agreements and Activities
389. It
is a singular fact of the proceedings that neither party on its own motion pleaded,
described, or relied upon oil contracts and concessions relating to the Red Sea
and the disputed Islands. The pleadings of the parties in respect of oil
contracts and concessions came in response to questions posed by a Member of
the Tribunal at the close of its hearings in February 1998; in the absence of
those questions, it appears that those pleadings would not have been made in
this phase of the proceedings.
390.
Nevertheless, in response to questions put to them, both parties submitted
considerable data and argument. In the view of the Tribunal, that data and
argument left some questions unanswered. It accordingly called for renewed
hearings to be devoted solely to Red Sea petroleum contracts and concessions.
Those hearings took place in London from July 6-8, with the benefit of
substantial further written pleadings as well as oral argument, in the course
of which, and after which, still further material data was introduced. In those
hearings, Eritrea largely maintained that these contracts and concessions were
probative of little that was relevant to the issues before the Tribunal,
whereas Yemen maintained that they were of major significance in support of its
position. Yemen contended that the pattern of Yemen's offshore concessions,
unprotested by Ethiopia and Eritrea, taken together with the pattern of
Ethiopian concessions, confirmed Yemen's sovereign claims to the disputed
Islands, acceptance of and investment on the basis of that sovereignty by oil
companies, and acquiescence by Ethiopia and Eritrea. Yemen stated that lack of
time had been the reason for its not having pleaded the contracts and
concessions on its own initiative.
The
Provisions of the Pertinent Contracts and Concessions
391.
Both Yemen and Eritrea have concluded contracts and concession agreements for
oil exploration, development, production, and sale of commercial quantities of
petroleum that might be found under the Red Sea. While in the event no such
quantities have so far been found, those contracts and concessions merit the
Tribunal's consideration for what they show and do not show. Of particular
significance for the issues before the Tribunal may be any effectivités
arising out of or associated with those contracts and concessions.
Contracts
and concessions entered into by Yemen
392.
Yemen has submitted information on Red Sea contracts and concession agreements
as follows.
Shell
Seismic Survey, 1972
393.
Yemen states that, in 1972, its predecessor, the Yemen Arab Republic, entered
into a contract with Shell International Petroleum Company for "a major
geophysical scouting survey in the Red Sea". It maintains that the survey,
carried out on Shell's behalf by Western Geophysical Company of America in
March 1972, involved the shooting of seismic reconnaissance lines in the area
of the Red Sea that encompassed the islands of the Zuqar-Hanish group, the
Zubayr group and Jabal al-Tayr, and from that fact argues that the survey is
supportive of Yemeni sovereignty over those Islands. It states that, as a
result of the survey, Shell decided that the southern third of the area
surveyed, a substantial zone that encompassed the Zuqar-Hanish group, was not
promising, but that it would take up a concession contract for a more northerly
block which included Zubayr Island.
394.
Yemen has not been in a position to provide a text of the survey contract,
whose existence Eritrea questions. It does provide a report of Shell
International Petroleum Maatschappij N.V. of January 1977, which refers to an
offshore scouting survey whose results were used to select the area of the
agreement discussed below. It introduced as well in the course of the hearings
on 7 July 1998 the Final Operations Report, Marine Seismic Survey, Offshore
Yemen (Red Sea) by Western Geophysical Company of March 1972. That report
states that the objective of the survey was to provide a preliminary seismic
coverage of "the concession area" (though at that stage there was no
concession), and notes that the field office and base of operations for the
seismic survey were in Massawa, Ethiopia. The report attaches a map of the
"approximate area covered by seismic program" (Plate I), which
extends right up to the Ethiopian coast.
395.
That map indicates that the survey area is irrelevant to questions of title;
Yemen hardly is claiming jurisdiction over the territorial waters of Eritrea,
and could not have meant to do so by the authorization or performance of the
seismic survey in question. The fact that the survey area embraced Islands in
dispute accordingly is not probative.
Shell
Petroleum Agreement, 1974
396.
The Yemen Arab Republic and Deutsche Shell Aktiengesellschaft concluded a
Petroleum Agreement on 16 January 1974. The contract area was defined as
meaning the specified area and its subsoil and seabed "under the
jurisdiction of the Yemen Arab Republic". It comprised a Red Sea block
north of the Zuqar and Hanish islands, which islands it names but does not
encompass. It does not encompass Jabal al-Tayr, which is to the west of the
contract area, nor does it name it. It names none of the islands it does
encompass. It includes the Zubayr group among the unnamed islands within the
contract area.
397. A
reconnaissance survey was contracted for by Shell that entailed seismic,
gravity and magnetic data acquisition in the contract area; the survey report
does not state that the survey was carried out within the territorial waters of
the Zubayr group. A well was drilled by Shell at a point far from the islands
in dispute; oil was not found in commercial quantities; and the agreement was
terminated.
398. In
a Final Report on the Exploration Venture of Yemen Shell Explorations GMBH
Yemen Arab Republic of May 1981, it is stated that: "The concession
area granted to Deutsche Shell . . . under the terms of the Petroleum
Agreement of 16 January 1974 extended from . . . the Yemen
mainland in the east to approximately the median line of the Red Sea in the
west."
399. In
view of that statement and the fact that the concession contract speaks not of
an area and its subsoil and seabed under the sovereignty but under the
jurisdiction of Yemen, the Tribunal concludes that the 1974 Shell concession
was granted and implemented in exercise not of Yemen's claims to sovereignty
over the islands and their waters within the contract area but in exercise of its
rights to the continental shelf as they then were. It further is of the view,
in the light of the foregoing factors, that, since the contract does not name
the Zubayr group and since Shell conducted no activities on the islands of the
Zubayr group or within their territorial waters, the 1974 Shell Petroleum
Agreement was entered into without particular regard to the Zubayr group. Those
islands appear to have been included within the contract area because the
Zubayr group fell on the Yemeni side of the median line, on a continental shelf
over which Yemen could exercise jurisdiction.
400. At
the same time, the Petroleum Agreement between Yemen and Shell was known to the
industry, was published, and its existence and, with sufficient diligence, its
terms, could have been known to Ethiopia had it followed the pertinent
publications (such as Barrow's Basic Oil Laws and Concession Contracts).
Ethiopia may be argued to have had notice, at any rate, constructive notice, of
its existence and provisions. It made no protest about the agreement, despite
its contract area including the Zubayr group to which Eritrea now lays claim.
Eritrea maintains that Ethiopia in fact was unaware of the terms of the
agreement; that, as a poor country locked in civil war, Ethiopia cannot be
charged with gaining knowledge of it, and that, in any event, since conclusion
and publication of a concession contract is not a title-generating act, there
was nothing to protest in the absence of concrete and visible activities of
Shell or the Yemeni Government on the Zubayr group. Yemen, for its part,
attaches significance to the failure of Ethiopia to protest. Such absence of
protest by Ethiopia, and later Eritrea, characterizes all the concessions
granted by Yemen in the Red Sea, and will be evaluated below.
401.
The area of the 1974 Petroleum Agreement between Yemen and Shell is further
reproduced in a map dated December 1976. That map was prepared by Shell, and is
found in a Shell Report of January 1977 marked "Confidential". It is
not contended that it has been published or could or should have been known to
Ethiopia. It shows the area of the agreement and the areas of detailed survey
within it (which are not near the Zubayr group). To the west of the area of the
agreement, there runs a line which is described as the "Approximate
tentative international boundary". That boundary runs west of the Zubayr
group and west of Zuqar and the Hanish islands as well. No evidence was offered
about the considerations that in the view of the drawer of the line gave rise
to it, nor did Eritrea specifically comment upon it. In Yemen's Comments on
the Documents introduced by Eritrea after the Final Oral Argument, 29 July
1998, maps 5 and 6 prepared by Yemen are described as reproducing the line.
402. It
appears to the Tribunal that the author of the Shell map was of the view that
the "approximate tentative international boundary" was to be drawn on
the basis of Yemeni sovereignty over most of the disputed islands and all of
the larger ones. That impression is supported not only by the fact that the
"approximate tentative international boundary" runs west of those
islands. It is strengthened by the author's having accorded the major disputed
islands, including Zuqar and the Hanish islands, an influence on the course of
the boundary as drawn.
Tomen-Santa
Fe Seismic Permit, 1974
403. A
Seismic Permit Agreement was concluded between the Yemen Arab Republic and Toyo
Menka Kaisha Ltd. ("Tomen") in 1974, which was extended to include
Santa Fe International Corp. The agreement was initially characterized by Yemen
in these proceedings as a "concession", which was contested by
Eritrea; when its text was later introduced, it was found to be entitled,
"Seismic Permit", and to provide for Tomen's conducting a marine
seismic survey in the contract area. The contract area is specified by the
contract to be outlined in "Exhibit A"; however, Yemen has not placed
"Exhibit A" in evidence and has not offered an explanation for its
absence from the text of a contract otherwise provided in full. The contract
itself gives the coordinates of the contract area and Yemen has placed in
evidence maps which it states were prepared for these proceedings on the basis
of those coordinates.
404.
Yemen affirms on the basis of those coordinates and maps that the contract area
embraced the whole of Zuqar and the Hanish islands. However, in an
"Exploration History Map" prepared by the United Nations Development
Programme (UNDP) and the World Bank, undated but apparently prepared late in
1991, on whose probative force Yemen repeatedly has relied, the western line
differs. The western line appears to run through, rather than to the west of,
the southern extremity of Greater Hanish Island (the explanatory block on the
map reads, "Tomen & Santa Fe, started 1974, ended 1975, seismic, 2150
km."). It may be that the line on the UNDP map runs through Greater Hanish
along a median line, as two other concessions, one concluded by Yemen and
another by Eritrea, appear to do.
405.
The Tomen-Santa Fe Seismic Permit Agreement recites that Yemen has
"exclusive authority to mine for Petroleum in and throughout" the
contract area, and that the contract area "means the offshore area within
the statutory mining territory of Yemen" described in the permit. The term
of the contract is six months (and appears to have been extended to a year).
The contract specifies that, "The execution of the work program shall not
conflict with obligations imposed on the Government of Yemen by International
Law". It provides that the contractor shall have the right of ingress to
and egress from the contract area and adjacent areas. It further provides that
Tomen shall, within the contract term, have the right to apply for a Petroleum
License for all or part of the contract area for the exploration, development
and production of petroleum, the terms of which are to be agreed upon guided by
the terms of similar licenses in OPEC countries.
406.
The Seismic Permit Agreement, while not a concession agreement, accordingly is
a petroleum-related contract that looks towards the conclusion of such an
agreement in certain circumstances. Its assertion of an exclusive authority of
Yemen to mine for petroleum within the contract area, and its reference to the
statutory mining territory of Yemen, is consistent with conclusion of a
contract for exercise of Yemen's rights on its continental shelf. Decree No. 16
concerning the Continental Shelf of the Yemen Arab Republic of 30 April 1967,
in proclaiming Yemeni sovereign rights over the seabed and subsoil of its
continental shelf and the continental shelf of its islands, asserts the
exclusive right to prospect for natural mineral resources of the shelf. The
contractual reference to obligations imposed upon Yemen by international law is
also of interest, and may be a reference to limited continental shelf rights.
In the view of the Tribunal, the Seismic Permit Agreement of itself does not
constitute a claim by Yemen to sovereignty over the islands within its contract
area, nor does Eritrea's failure to protest the agreement indicate acquiescence
in any such claim. However to some extent it presupposes some measure of title
to any islands contained within the contract area. The contract area included
the land territory and territorial waters of the islands within its extent; this
would have included the land territory and also the territorial waters of some
or all of Greater Hanish and all of Zuqar and Lesser Hanish.
407.
Eritrea argues that in any event seismic surveys are not indicative of
sovereign claims. It relies on the Law of the Sea Convention, Part XIII on
"Marine Scientific Research". Article 241 provides: "Marine
scientific research shall not constitute the legal basis for any claim to any
part of the marine environment and its resources". Article 246 provides
for the regulation by coastal states of marine scientific research in the
exclusive economic zone and on the continental shelf; research which shall be
conducted with the consent of the coastal state. States shall in normal
circumstances grant their consent for marine scientific research projects by
other states or competent international organizations "in order to
increase scientific knowledge of the marine environment for the benefit of
mankind." In the view of the Tribunal, these provisions do not relate to
the seismic and other explorations for petroleum for commercial purposes
carried out by licensees of the Parties in the circumstances of these
proceedings.
408.
Accordingly, activities undertaken in pursuance of the Tomen-Santa Fe Seismic
Permit and other like authorizations by licensees of the Parties have a certain
importance, and must be weighed by the Tribunal. In the period between 23 July
1974, when the vessel Western Geophysical I departed from Hodeidah, and
the completion of its voyage on 9 September1974, a period of some six weeks,
"Of the originally scheduled 1500 miles of program, only 1336 miles were
recorded due to . . . dangerous shoaling in the offshore islands
area". That suggests that there were difficulties in working close to the
islands; there are a number of references in the report to the Zuqar and Hanish
islands, but no indication is given that suggests any activity on the islands.
It is not easy to deduce from the text and maps provided whether seismic work
was performed within the territorial waters of the islands. One, for example,
speaks of an aerial survey 2 square miles in extent "East of Little Hanish
Island". But how far east - and whether within or without the
territorial waters of Little Hanish Island - is not shown, nor was
the question precisely pursued by counsel for Yemen, who confined himself to
stating that operations were conducted "very close" to the islands.
Figure l of the Santa Fe Report, "Location map & geophysical
map", indicates that the areas of detailed survey avoided the immediate
waters of the islands, but the map of itself does not show at what proximity to
the islands seismic work was conducted. However, if, for example, the
geographic position stated "West side Zuqar Island; southwest intersection
Lines 50 and 8" is matched against the survey grid found in Figure
1 - each of the bigger blocks being 10 square
kilometres - it appears that seismic activities did extend well into
Zuqar's territorial waters. As far as can be determined from a review of the
report, it is uncertain whether the same can be said for the waters of the
Hanish islands.
409.
The Santa Fe Report continues: "During the seismic survey, the Zuqar and
Hanish islands were observed from aboard ship by the writer, appearing to be
made entirely of volcanic rocks . . . Later, Mr. Hazem Baker, a
geologist with the Yemeni government, went ashore on Zuqar Island and collected
samples . . . all basaltic." It seems reasonable to presume
that he believed that he was landing on an island at least under Yemeni
jurisdiction.
Hunt
Oil Company Offshore Production Sharing Agreement, 1984
410.
Yemen and Offshore Yemen Hunt Oil Company on March 10, 1984 concluded an
Offshore Area Production Sharing Agreement. It recites, "Whereas, all
Petroleum in its natural habitat in strata lying within the boundaries of yemen
is the property of the state; and Whereas the state wishes to promote the
development of potential oil resources in the Area and the contractor wishes to
join and assist the State in the exploration, development and production of the
potential Petroleum resources in the Area . . ." Hunt is
appointed Contractor "exclusively to conduct Petroleum Operations in the
Area described . . . the state shall in its name retain title to the
area covered . . .". The agreement provides that Yemeni laws
shall apply to the Contractor provided that they are consistent with the
agreement, and that the rights and obligations of the parties shall be governed
by the agreement and can be altered only with their mutual agreement. The
agreement was approved by Government Decree. The coordinates of the area
covered by the agreement are set out in Annex A, to which is attached a map at
Annex B showing those coordinates but not naming or showing any of the disputed
islands. Yemen has prepared and submitted a map to the Tribunal which shows the
Hunt concession as running in the west very close to the edge of, but not
including, Jabal al-Tayr, and, at the southern end of the contract boundary,
just including the Zubayr group.
411. In
fulfilment of its exploration obligations under the agreement, Hunt contracted
with Western Geophysical to conduct a seismic survey of the concession area. It
did so in 1985, "infilling" Shell data collected a decade earlier.
That operation included the area of the Zubayr islands and, it is claimed,
Jabal al-Tayr even though the latter did not fall within the concession area.
Seismic soundings were taken "around the Zubayr islands and Jabal
al-Tayr" but it is not claimed or shown that seismic activities were
conducted within their territorial waters. No activities on the Islands are
alleged or shown. Aeromagnetic surveys in the contract area were conducted by
an aircraft flying from Yemen, and consequently permission to fly through
Yemeni airspace was sought and accorded; that fact neither supports nor
detracts from Yemen's claims about the status of the contract area. Equally
neutral is the fact that, in connection with well drilling, permission was
sought "to enter YAR territorial waters and conduct offshore drilling
operations", which were nowhere near the Islands. Two wells were drilled
far from the Islands; neither produced oil in commercial quantities, and the
concession was relinquished.
412.
The Production Sharing Agreement does not in terms state a claim of sovereignty
of Yemen over the concession area, and, as noted, it takes no notice of the
Islands within it, verbally or in the annexed map. It could be interpreted as a
concession issued within the area demarcated by a median line in implementation
of Yemen's rights on its continental shelf, a concession which includes the
Zubayr group but stops just short of including Jabal al-Tayr. It may be said
that if it was the intention of Yemen in issuing the concession to assert
sovereignty over the disputed islands, the concession would have included Jabal
al-Tayr. What seems likelier is that this concession, as others, was issued
with commercial considerations in mind and without particular regard to the
existence of the Islands. The fact that title to the contract area is stated to
remain in the State of Yemen is not determinative; Yemen holds title to
resources on and under its continental shelf; but since the agreement specifies
that Yemen retains title "to the area covered" that may be read as a
reservation of sovereign title. The reference to the "boundaries of
Yemen" is also suggestive of a claim of sovereignty, though
"boundaries" does not exclude continental shelf boundaries. The Hunt
Production Sharing Agreement was reported in the petroleum literature and gave
rise to no protest on the part of Eritrea.
BP
Production Sharing Agreement, 1990
413.
Yemen and British Petroleum concluded a Production Sharing Agreement on October
20, 1990, whose terms are very similar and in pertinent respects identical to the
foregoing Hunt Agreement. It covers the same Antufash Block offshore Yemen that
Hunt operated in earlier, and thus embraces the Zubayr islands but not Jabal
al-Tayr. However, and this may reflect the policy of Yemen in respect of
potential petroleum blocks offered by it in the 1990s, the BP Agreement's
description of the block is more specific than that found in the Hunt
Agreement, providing: "Whereas, the State wishes to promote the
development of potential Petroleum Resources in the Agreement Area block 8,
As-Sakir, Shabwa Province, ROY . . ." The text of the agreement
was published in Barrow's. It elicited no protest from Eritrea.
414. BP
conducted extensive aeromagnetic surveys of the agreement area. Low-level
flights, conducted with the permission of the Government of Yemen, covered the
Area, including the Zubayr islands, and Jabal al-Tayr though it was outside the
Area. A Yemeni military officer accompanied the aircraft during its survey.
Survey results were unpromising and BP relinquished its rights in the Area in
1993.
415.
The Tribunal does not attach much importance to overflights by either of the
parties of the islands in dispute. In the circumstances of the case, it is not
clear that overflights of these uninhabited islands are tantamount to a claim
of jurisdiction, still less sovereignty, over the Islands. However the
agreement's characterization of the Antufash block as comprising or being
within a province of the Republic of Yemen is a factor of significance in
favour of Yemen; it indicates a sovereign rather than a jurisdictional claim.
At the same time, the fact that the agreement was entered into in 1990 and
published about that time is noteworthy. Ethiopia was then locked in its final
struggle with the Eritrean liberation movement, the Mengistu regime was close
to collapse, and to suggest that Eritrea today should be taxed with Ethiopia's
failure during that period to find and protest the terms of the agreement may
be unreasonable.
Total
Production Sharing Agreement, 1985
416.
Yemen and Total-Compagnie Française des Pétroles concluded a Production Sharing
Agreement in 1985, to which Texaco later became party. Its terms appear
close to those of the Hunt Agreement concluded the year before, summarized in
pertinent passages above. It however recites, "Whereas, all Petroleum in
its natural habitat in strata lying within the boundaries of Yemen and in the
seabed subject to its jurisdiction is the property of the State;
. . ." Since the area of the agreement is onshore as well as
offshore, this could be read as an indication of an offshore claim only to
jurisdiction and not sovereignty, and could be taken as an indication of such a
Yemeni assumption in other petroleum agreements. The Area is stated to be
described in Annex A and shown on the map labelled Annex B, but neither Annex
is attached to the text submitted by Yemen to the Tribunal. However, it is
common ground between the parties that the Total Agreement's western line runs
to the east of Zuqar and the Hanish islands. There is no ground for concluding
that this fact suggests a lack of entitlement of Yemen to enter into agreements
embracing the disputed islands. It rather again suggests that the petroleum
agreements entered into by Yemen were concluded without regard to the Islands.
417.
Since the agreement area does not include any of the islands in dispute, it is
of limited interest for these proceedings, except in the following respects.
Total commissioned seismic studies, which were concentrated between the
agreement's western line (which fell short of the Hanish islands) and the
coastline of Yemen. The single well drilled - which proved unproductive and led
to the agreement's termination in 1989 - was distant from the Hanish
islands and towards the coast. However, less detailed seismic surveys were
conducted to the west of the Hanish islands, outside the contract Area, which
entered territorial waters of those islands. Yemen acted as if it were entitled
to authorize, and Total's agent acted as if it were entitled to conduct, those
surveys in Hanish territorial waters.
418.
Having come to know the Hanish islands through its offshore concession, Total
in 1993 decided to become a sponsor of the French Ardoukoba scientific mission
to the islands to study marine life in the reefs. Total requested and received
Yemeni Government permission to establish a landing strip on Greater Hanish so
that a Total aeroplane could transport equipment to it. It is also claimed that
Total sought and received permission to establish a radio station on Greater
Hanish and to permit visiting scientists to use its frequency; evidence in
support of this claim has not been provided. Evidence has been provided showing
that access to the Hanish islands, described by Total as uninhabited, was
subject to authorization delivered by the "Central Operation of the
Army". After the conclusion of the Ardoukoba mission, Total produced a
report that referred to "les îles Hanish en république du Yemen".
Thereafter it sought and received governmental authorization to improve the
landing strip and fly Total personnel to Greater Hanish for rest and
recreation. For a time, a Total aircraft flew frequently to Greater Hanish,
carrying passengers for these purposes.
419.
Incidental as it may have been to Total's Petroleum Agreement, the building and
use of an airstrip on Greater Hanish is in the view of the Tribunal a material effectivité.
It demonstrates the exercise by Yemen of jurisdiction over Greater Hanish, a
recognition of that jurisdiction by Total, and the conduct of visible indicia
of that jurisdiction - an airstrip in active use - over a
period of time. Eritrea appears to have been unaware of it and in any event
made no protest. However, Eritrea has introduced evidence showing that a report
of activities of a French company in the waters around Greater Hanish was
received in May 1986, the period when Total was operating in that area; that an
Ethiopian patrol vessel was dispatched to the area to investigate, and that
nothing was found. This evidence suggests that, in the perspective of Eritrea,
sovereignty over Greater Hanish lay with it.
Adair
International Production Sharing Agreement, 1993
420.
Yemen and Adair International entered into a Production Sharing Agreement in
1993. The text of the agreement has not been offered in evidence and
accordingly the Tribunal is not in a position to analyse it. The agreement was
not ratified by Yemen and did not come into force. Yemen has, however, provided
maps of the agreement area which show it as falling within Block 24 or
the Al Kathib block in which the Tomen-Santa Fe area fell. It maintains that
Yemen had on offer an offshore block that included the whole of the Hanish
islands, and that Adair chose to take a contract area slightly less than the
total block on offer. The maps of the Adair area provided by Yemen show the
western line to cut through the southern portion of Greater Hanish Island,
leaving the larger part, but not all, of Greater Hanish within the area of the
agreement. It explains that Adair drew that western line for commercial reasons.
As far as the Tribunal can judge, the Adair Agreement's western line roughly
runs along a median line between the coasts of Yemen and Eritrea, drawn without
regard to the islands in dispute.
Blocks
Offered by Yemen
421.
Beginning in 1990, Yemen no longer responded to proposals by prospective
concessionaires for rights in areas drawn by them, but began offering
concession blocks, dividing most of Yemen and its offshore into blocks. It
states that the blocks include the Zubayr islands and the Hanish islands
- it offers no explanation for not including Jabal al-Tayr - and
maintains that this is further evidence of Yemen holding itself out as the
sovereign of disputed islands.
422.
Such weight as the Tribunal might be disposed to give to that contention may be
qualified by the evidence about the western lines of the offshore blocks
provided by Yemen. Yemen has submitted not only its depiction of the blocks. It
has also submitted and relied upon, as "expert opinion evidence confirming
Yemen's exercise of State authority over the Hanish islands and other
islands", a number of maps prepared by Petroconsultants S.A. of Geneva,
illustrations of Petroconsultants' series, "Foreign Scouting Service,
Current Status". The maps are dated from 1989 until November 1997. Three
of these maps show a western line of Yemen's relevant block running not to the
west of Greater Hanish Island but through it, as the Adair Area line does. The
map for 1994 is linked to the Adair Agreement but the maps for 1996 and 1997
are not.
Petroleum
Agreements and Activities of Ethiopia and Eritrea
423.
Ethiopia in the 1970s entered into a number of offshore concession agreements,
which stop short of the deep trough that runs through the middle of the Red
Sea. At that time, oil technology was unable to support drilling in so deep a
trough. While Yemen maintains that these agreements - which it rather
than Eritrea introduced in these proceedings - showed a recognition
by Ethiopia and the companies concerned that Ethiopia was not entitled to issue
concessions embracing the disputed islands, in the view of the Tribunal these
agreements simply reflect technological and commercial realities and carry no
implication for the rights of the parties at issue in these proceedings. It is
reinforced in this conclusion by the fact that Ethiopian concessions typically
contain a formula such as the following (as, mutatis mutandis, do maps
attached to Yemeni concessions): "The description of the eastern boundary
of the contract area does NOT necessarily conform to the international
boundaries of Ethiopia and accordingly nothing said herein above is to be
deemed to affect or prejudice in any way whatsoever the rights of the
Government in respect of its sovereign rights over any of the islands or the
seabed and subsoil of the submarine area beneath the high seas contiguous to
its territorial waters or areas within its economic zone." The Tribunal
also finds unenlightening two Red Sea offshore petroleum contracts concluded by
Eritrea as late as 1995 and 1996, which were promptly protested by Yemen as
overlapping its waters. But Ethiopia's contract with International
Petroleum/Amoco is important.
International
Petroleum /Amoco Production Sharing Agreement, 1988
424.
Ethiopia concluded a Production Sharing Agreement with International Petroleum
Ltd. of Bermuda on May 28, 1988. The concession covered "the
onshore-offshore area known as the Danakil Concession in the PDRE"
(People's Democratic Republic of Ethiopia). It recites that, "WHEREAS, the
title to all Petroleum existing in its natural condition on, or under the
Territory of Ethiopia is vested in the State and people of Ethiopia
. . . and the Government wishes to promote the exploration,
development and production on, in or under the Contract Area . . .",
the Government grants to the Contractor "the sole right to explore,
develop and produce Petroleum in the Contract Area . . ." On
November 1, 1989, 60% of the contract was assigned to Amoco Ethiopia Petroleum
Company. Amoco assumed operative responsibility under the assignment.
425.
The map attached to the 1988 Production Sharing Agreement shows
"Ethiopia-Red Sea Acreage", onshore and offshore, the latter's
eastern line running through the southwest extremity of Greater Hanish Island.
The description of the Contract Area runs "To the Offshore point 13 at the
intersection of LAT 14 DEG 30 with the international median line between North
Yemen and Ethiopia, then along the Offshore median line". The agreement
contained a force majeure clause, including wars, insurrections, rebellions and
terrorist acts, during which the life of the contract would be prolonged.
Apparently in view of the fighting between Ethiopian and Eritrean units, force
majeure was declared on 9 February 1990 and as of June 1992 was stated to be
still in effect.
426.
However there is ambiguity about the extent of the Contract Area, at any rate
in depictions of it on maps. Amoco Ethiopia Petroleum Company filed four Annual
Reports with the People's Democratic Republic of Ethiopia which are in point.
427.
The Annual Report for 1989 recounts that geologic activities were undertaken in
1989, that Delft Geophysical Company was awarded a contract to acquire marine
seismic, gravity and magnetic data, and that a scout trip by Delft was
completed in December. Preliminary seismic interpretation and mapping was
initiated. The map attached to the 1989 Report shows virtually all of Greater
and Lesser Hanish within the area of the contract, i.e., considerably more than
does the map attached to the Production Sharing Agreement.
428.
The Annual Report for 1990 observes that activities were suspended with the
advent of force majeure on February 9, 1990; as of the end of 1990, the
security situation within the Danakil area was considered to remain unsafe for
normal seismic operations. It reports on considerable geologic and geophysical
activity before that time, and lists some $2,000,000 in expenditures under the
agreement. While the description of the Contract Area matches that in the 1989
report, two maps are attached to the 1990 Annual Report. The first map of the
Danakil Contract Area shows the eastern line as running not through but rather
west of the Hanish islands. The second map of that Contract Area shows
virtually all of Greater and Lesser Hanish within the Contract Area,
duplicating the map attached to the 1989 Annual Report.
429.
The 1991 Annual Report notes that force majeure has effectively extended the
initial period of the contract. While normal seismic operations were unsafe in
1991, substantial technical evaluation of existing data continued. The map of
the Contract Area in the 1991 Annual Report shows virtually all of the Hanish
islands within the Contract Area, duplicating the maps to that effect in the
1989 and 1990 Reports.
430.
The 1992 Annual Report reports limited reprocessing work. It states that Amoco
and International Petroleum representatives met with officials of newly
independent Eritrea in Asmara on June 24, 1993, when assurances were received
that the Danakil Production Sharing Agreement would be recognized by Eritrea.
It attaches a contract summary entitled, "Eritrea Danakil Block" and
gives an expiration date of February 9, 1997, "to be delayed because of
force majeure". The governing law is now described as Eritrean. The Danakil
Block map attached to the 1993 Annual Report shows virtually all of the Hanish
islands within the Contract Area, as does a "composite magnetic map of the
Danakil concession".
431. A
map prepared by Petroconsultants, on whose maps Yemen has repeatedly relied,
also shows the Amoco Contract Area as embracing the greater part of Greater
Hanish.
432.
Yemen, while not denying that it never protested the terms or geographical
extent of the International Petroleum-Amoco Production Sharing Agreement,
argues that it could not be charged with doing so. It observes that an article
in the Petroleum Economist of October 1991 presents a map which shows an
Amoco concession that does not include the Hanish islands. (The UNDP map, which
is an "Exploration History Map", does not name the Amoco concession.)
Yemen also maintains that the Amoco contract lasted only some three months and
that, by the time it might have come to its attention, force majeure prevailed,
which might have induced Yemen to take no action.
433. The
Tribunal does not find Yemen's position entirely persuasive. As the Annual
Reports summarized above demonstrate, the IPC/Amoco contract was extended well
beyond three months and into the days of Eritrean independence; its life
compares with that of the contracts on which Yemen relies. If Yemen had secured
and read Amoco's Annual Reports - annual reports of American oil
companies are generally publicly available for the asking - and if
Yemen had evinced the alertness it did in respect of Eritrea's contracts of
1995 and 1996, it would have seen that Ethiopia claimed the right to contract
for the exploration, development and production of oil in an area claimed as
its territory that included some or virtually all of Greater Hanish islands.
Amoco is a major player on the international petroleum scene, and in the
immediate area; indeed, one of the maps introduced into evidence by Yemen,
shows Amoco together with BP in the Antufash block and shows the Danakil Amoco
concession angling into the Adair area in the Al Kathib block.
434.
Yemen in its argument has made a great deal about what it alleges is the
failure of Ethiopia or Eritrea to grant any concession contract that included
disputed islands, and their failure to protest grants of Yemen that did include
those islands. But it has been demonstrated that, in the lately pleaded
International Petroleum-Amoco Production Sharing Agreement, Ethiopia did grant
a concession including much or virtually all of the Hanish islands, and that
Yemen failed to protest that agreement. It is of further interest that the map
attached to the Production Sharing Agreement speaks of drawing the boundary
along the international median line between Yemen and Ethiopia.
435.
Eritrea also claims certain pertinent effectivités. It has submitted a
copy of an Ethiopian radio transmitting license granted circa 1988-89 (the
earlier date on the contract is apparently of the Ethiopian calendar) to Delft
Geophysical Co. for the establishment of a station on Greater Hanish Island,
presumably in connection with the seismic work which Amoco had contracted with
Delft to perform. It has provided the text of a detailed order to the most
senior military commanders to provide protection to a petroleum exploration
expedition of the Ethiopian Ministry of Mines and Energy to be deployed to
areas "including Greater Hanish Island". It has provided an Ethiopian
memorandum on oil exploration in the Red Sea carrying the Ethiopian date of
April 13, 1982 (which is circa 1989 AD.), stating that Amoco-Ethiopia Petroleum
Company "has installed navigation beacons to enable it to conduct seismic
study . . . including on Greater Hanish Island". The memorandum
continues:
"An
Amoco professional team of contractors will be available starting 3rd week of
December to select areas for the installation as follows:
For two
weeks installation of navigation beacons on the 8 selected locations;
At the
end of the two-week period, conduct 6 week-long seismic tests . . .
."
and it
calls for ensuring the protection of the contractors and their equipment during
beacon installation and for the protection of the installed beacons. It further
requests protection for the Delft Geophysical ship while it is conducting
seismic tests. Another memorandum states that an Amoco contracting team will conduct
helicopter patrols to select locations for the installation of navigation
beacons, including locations "on Greater Hanish". It is not entirely
clear whether these activities were in fact completed, although the Amoco
Annual Report for 1989 does corroborate that Delft Geophysical did conduct a
scout trip in December of 1989 (see para. 427, above).
* -
*
436. In
the light of this complex concession history, the Tribunal has reached the
following conclusions:
437.
The offshore petroleum contracts entered into by Yemen, and by Ethiopia and
Eritrea, fail to establish or significantly strengthen the claims of either
party to sovereignty over the disputed islands.
438.
Those contracts however lend a measure of support to a median line between the
opposite coasts of Eritrea and Yemen, drawn without regard to the islands,
dividing the respective jurisdiction of the parties.
439. In
the course of the implementation of the petroleum contracts, significant acts
occurred under state authority which require further weighing and
evaluation by the Tribunal.
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