JDA Basics ('JDA-101')

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International maritime boundary negotiations can be difficult and lengthy, especially if the disputing States have overlapping maritime zone claims. In addition, if cross-border hydrocarbon deposits exist (or are expected to be discovered), bilateral border negotiations are likely to be even more difficult because these resources ‘generally prompt States to make … overlapping claims.’[1] As further explained by Ong,

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Since all such claims are ostensibly valid by virtue of the coastal State's inherent sovereign rights … the delimitation of an area where an oil deposit may be present, never an easy task to begin with, becomes immeasurably more difficult. Nor do the vagueness and generality of the laws on maritime boundary delimitation facilitate the search for an agreed solution in such cases … Moreover, contested claims to sovereign rights over maritime territory … have a way of becoming imbued with nationalistic overtones and understandably acquire an air of permanency within the national context.[2]

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A widely accepted method of facilitating exploitation of resources in areas of overlapping claims has been the execution of ‘provisional’ bilateral arrangements, commonly manifesting in the form of Joint Development Area (JDA) agreements.[3] JDA agreements have been proclaimed as ‘one of the major trends of international law since the 1990s.’[4] They are most commonly used for hydrocarbon production and fisheries management.[5]

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JDA agreements are a solution to unlock a border dispute impasse where ‘parties find it difficult or impossible to agree on a single boundary between them or because the resources straddle the agreed boundary in such a way that it is not feasible for the resources to be exploited effectively and equitably by the individual States acting alone.’[6] The States, which are often neighbours, would have a stronger desire to exploit a common resource in preference to their own nationalistic interests. As this chapter will discuss, different models have been adopted to achieve an acceptable solution to, in many cases, an otherwise intractable situation. It may also be a misnomer to categorize JDA agreements as ‘provisional’ as they seem to take on a semi-permanent status over time. Of the 36 bilateral JDA agreements related to oil and gas activities identified and studied in this thesis, including some that are over 60 years old, none has subsequently been completely replaced by a ‘permanent’ development agreement.

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JDA agreements are not easy to negotiate.[7] Balancing sovereignty and unilateral control of resources with joint management of resources for equitable sharing against a competing State interest can be challenging. This may be further exacerbated when the States have other ongoing disputes and if the threat of military aggression is present. Successful JDA agreements have been shown to facilitate the easing of tensions between rivals,[8] potentially allowing cooperation beyond the maritime border such as environmental protection and security.

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Of the 109 disputed maritime borders identified in this thesis, the most common method for resolving maritime border disputes was found to be the execution of a bilateral JDA agreement. JDA agreements were responsible for 46% of all the resolved disputes in the dataset, having been adopted in 36 out of 79 resolved disputes.[9]  Significantly, under the JDA definition adopted by this thesis, 23 out of 36 JDAs are in areas where the bilateral maritime boundary had previously been defined at the time that the JDA agreement was negotiated. In these cases, the motivation for the JDA was not to resolve an ongoing maritime border dispute, but to preserve the unity of hydrocarbon resources straddling the undisputed boundary line. Developing the resources as a single unit allows optimum reservoir management and development, and may allow development of the resource by a single operator, often the more experienced of the two State-owned national energy companies.[10] As discussed in this chapter, the management of JDA agreements can also range from simple fiscal arrangement where revenues or profits are shared to the creation of a bespoke legal entity managing and operating the JDA with defined sovereign-like powers on behalf of the neighbouring States.[11]

The JDA concept has been internationally accepted since at least 1958 when the first JDA agreement was executed between Saudi Arabia and Bahrain to develop an offshore oil field.[12] The concept has continuously evolved but there remains an absence of a universally accepted definition or understanding of the concept.[13]  As per Beckman and Bernard, joint development is a,

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[G]eneric term … [which] extends from unitization of a single resource straddling an international boundary to joint development of a shared resource where boundary delimitation is shelved because it is not feasible or possible to reach agreement on a boundary at the time.[14]

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A similarly broad definition was developed by a multinational workshop on the South China Sea which defined joint development as ‘extending from unitization of shared resources to unilateral development of a shared resource beyond a stipulated boundary, and various gradations in between.’[15]

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UNCLOS articles 74(3) and 83(3), which will be discussed in detail in this chapter, have been credited with opening the discussions for States to adopt more cooperative approaches to traditional binding boundary lines.  Many subsequent JDA agreements, as well as ICJ judgements, refer to these articles for their legal justification.  This chapter, as well as the Conclusion chapter, will discuss the impact of UNCLOS on type as well as the execution rate of JDA agreements, recognizing that JDA structures have evolved in the four decades since UNCLOS.  The Conclusion chapter will also introduce key terms that could be included in a future JDA Model Agreement to further facilitate JDA negotiations.

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Most definitions restrict JDA agreements as those between States only, excluding agreements between a government and an oil company or between private companies.[16] Some definitions, including the one adopted by this thesis, include instances where the international boundary has been defined as well as where the boundary remains disputed and overlapping claims exist.[17] Though not all scholars agree with this inclusion, many, including Ranier Lagoni of the Exclusive Economic Zone Committee of the International Law Association, concur with their definition of JDA agreements as ‘the co-operation between States with regard to the exploration for and exploitation of certain deposits, fields or accumulations of non-living resources which either extend across a boundary or lie in an area of overlapping claims.’[18]

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For the purposes of this website, JDA agreements are inter-governmental economic agreements for the expressed purpose of joint offshore exploration or exploitation of hydrocarbon resources in a defined maritime area. This website considers the execution of a JDA agreement as a ‘resolution’ of the boundary dispute, recognizing that these arrangements are considered ‘provisional agreements’ referred to by UNCLOS articles 74 and 83 of UNCLOS.[19]

 

[1] David M Ong, 'Joint Development of Common Offshore Oil and Gas Deposits: ‘Mere’ State Practice or Customary International Law?' (1999) 93(4) American Journal of International Law 771, 774. [J-O4#]

[2] Ibid 776. [J-O4#]

[3] This thesis has identified JDAs in South East Asia, northeast Asia, Persian Gulf, Europe, Africa, and South America. JDAs are being considered as potential solutions for many of the unresolved disputes in the database.

[4] J. Tanga Biang, ‘The Joint Development Zone between Nigeria and Sao Tome and Pricipe: A Case of Provisional Arrangement in the Gulf of Guinea. International Law, State Practice and Prospects for Regional Integration’ (Division for Ocean Affairs and the Law of the Sea, United Nations New York, 2010) 9. [B-B4#]

[5] This thesis will focus on JDA agreements negotiated for the purpose of exploitation of oil and gas resources only.

[6] Biang (n 4) 6 n 14. Biang quotes Thomas A. Mensah, ‘Joint Development Zones as an Alternative Dispute Settlement Approach in Maritime Boundary Delimitation’ in Rainer Lagoni and Daniel Vignes (ed), Maritime Delimitation (Martin Nijhoff Publishers, 2006) 147. [B-B4#]

[7] Robert Beckman and Leonardo Bernard, 'Framework for the Joint Development of Hydrocarbon Resources' Centre for International Law, National University of Singapore, 2013) 25. [J-B3#]

[8] Vasco Becker-Weinberg, Joint development of hydrocarbon deposits in the law of the sea (Hamburg studies on Maritime Affairs, 2014) 101. [B-B8#]

[9] As will be discussed in subsequent chapters, 30 disputes (out of 105 identified bilateral disputed borders in the database) remain unresolved as of Q1 2021. Please refer to Appendix A and B for complete list of resolved and unresolved disputes studied in this thesis.

[10] An example of this is the Bahrain–Saudi Arabia JDA that is operated by Saudi Aramco, a company with more experience than the equivalent Bahrain national oil company.

[11] Powers could include customs, security, and environmental protection.

[12] Bahrain- Saudi Arabia Boundary Agreement, signed 22 February 1958 (entered into force 26 February 1958). The second clause in the agreements states, ‘The exploitation of the oil resources in this [defined] area will be carried out in the way chosen by His Majesty on the condition that he grants to the Government of Bahrain one half of the net revenue accruing to the Government of Saudi Arabia and arising from this exploitation, and on the understanding that this does not infringe the right of sovereignty of the Government of Saudi Arabia nor the right of administration over this above-mentioned area.’; Clive Schofield, ‘Defining Areas for Joint Development in Disputed Waters’ (Conference Paper, Recent Development of the South China Sea Dispute and Prospects of Joint Development Regime, December 6-7, 2012, Haikou, China) 4. Technically, the Bahrain-Saudi Arabia JDA does not cover a ‘joint’ zone as the defined field (Fasht Abu-Sa’fah field) is entirely on the Saudi Arabian side of the delineated border. However, as the revenue is divided between the two States, and field ownership was previously disputed between them, it is considered as the first maritime JDA. [D-AG75#] [B-S1#]

[13] Chijioke S. Ugwuanyi, 'Does the Use of Joint Development Agreements Bar International Maritime Boundaries Delimitation'(2011) 1 Dublin Legal Rev 28, 30. [J-U1#]

[14] Beckman and Bernard (n 7) 11. [J-B3#]

[15] Ong (n 1) 772, n 8. The footnote states, ‘The Conclusions and Recommendations of the lawyers' group at the Second Workshop on Geology and Hydrocarbon Potential in the South China Sea and Possibilities of Joint Development defined joint development as extending from unitization of shared resources to unilateral development of a shared resource beyond a stipulated boundary, and various gradations in between.’ [J-O4#]

[16] Ranier Lagoni, ‘Oil and Gas Deposits Across National Frontiers’ (1979) 73(2) The American Journal of International Law 215, 222. (‘Oil and Gas Across Frontiers’). [J-L6#]

[17] Ibid 239. [J-L6#]

[18] Tara Davenport, 'Joint Development in Asia: Lessons for Sustainable Peace in South China Sea ' (Conference Paper, 8th Asian Law Institute Conference, Kyushu, Japan, 2011) 7 n 40. Footnotes quotes Chidinma Bernadine Okafor, ‘Joint Development: An Alternative Legal Approach to Oil and Gas Exploitation in the Nigeria-Cameroon Maritime Boundary Dispute?’ (2006) 21(4) International Journal of Marine and Coastal Law 489, 495. [B-D1#]

[19] United Nations Convention on the Law of the Sea, opened for signature 10 December 1982, 1833 UNTS 3 (entered into force 16 November 1994) articles 74 and 83 ('UNCLOS'). These articles will be discussed in depth later in this chapter; The British Institute of International and Comparative Law, Report on the Obligations of States under Articles 74(3) and 83(3) of UNCLOS in respect of Undelimited Maritime Areas (Report, June 30 2016) 16. ‘Arguably, any treaty that establishes a joint exploitation or management zone as a substitute for a maritime boundary, even if it makes no reference to Articles 74(3) and/or 83(3) of UNCLOS and indeed was concluded before the adoption of UNCLOS, should be regarded as a provisional arrangement within the meaning of those articles unless it is envisaged as being a permanent substitute for a boundary.’ [T-UN1#] [B-B10#]