History of unitization-based cooperation in the development of offshore cross-border deposits. Part I

This paper traces the history of how states came to cooperate in the development of offshore cross-border oil or gas deposits. First, it explains the shift in how a state‘s offshore has come to be viewed from ―open to all‖ to sovereign rights over an exclusive economic zone and finally to cooperation in the interest of all parties concerned. Secondly, it discusses the types of agreements states signed and the problems these agreements solve. The types of agreements are exemplified in this second part, while international state practice of cooperation towards an efficient and fair exploitation of common deposits is explained in the third part.

Cooperation in the development of offshore cross-border deposits became state practice in two different parts of the world, at the same time. The third part of this paper explains how the states in the Persian Gulf came to cooperate in the development of their cross-border deposits.

Ever since Winston Churchill decided that the Imperial Navy switch from coal to oil, before World War I, crude oil has become a vital resource of modern economies and its exploitation turned from a commercial issue into a strategic one for all parties involved.

Thus, the industry was defined by parties‘ willingness to cooperate or by the results of different types of conflict. The development of offshore, cross-border deposits follows these patterns and presents two main types of problems. On one hand, due to physical characteristics of oil/gas deposits, exploitation based on the rule of capture is destined to result in conflicts between neighboring producers. On the other hand, offshore drilling is difficult and entails using advanced, expensive technologies which in turn require specialized know how.

Thus, cross-border cooperation for the development of cross-border, offshore deposits is all the more important as it is difficult to undergo. The moment the first barrel of oil from a common oil project is sold is the last stage of a time consuming process that turned into state practice after a decade‘s long evolution of concepts and international norms.

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