Settlement of Oil and Gas Disputes: Domestic and International Perspectives

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SETTLEMENT OF OIL AND GAS DISPUTES: DOMESTIC AND INTERNATIONAL PERSPECTIVES

PAPER DELIVERED BY:

OLABISI O. SOYEBO, SAN, MCIArb.

AT

THE MINISTRY OF JUSTICE MAITAMA, ABUJA

29th NOVEMEBER, 2011.

SETTLEMENT OF OIL AND GAS DISPUTES: DOMESTIC AND INTERNATIONAL PERSPECTIVES BEING A PAPER DELIVERED BY OLABISI O. SOYEBO. SAN. MCIArb., AT THE MINISTRY OF JUSTICE MAITAMA ABUJA ON 29TH NOVEMEBER, 2011.

INTRODUCTION

Oil and gas are considered among the world's most important resources and the oil and gas industry plays a critical role in driving the global economy. They are used for numerous products, in addition to serving as the world's primary fuel source. The processes and systems involved in producing and distributing oil and gas are highly complex, capital-intensive and require state-of-the-art technology. Though efforts are being made to develop alternative sources of energy the world over, Oil and Gas will no doubt remain the largest fuel in the international energy market for some time and demand for the resources will continually create transactions and the attendant disputes. We all know that big business means big problems!

The focus of this paper is to highlight the types of disputes which arise in the Oil and Gas industry, the type of Dispute Settlement/Resolution mechanisms available for resolving such disputes, issues of jurisdiction vis a vis private international law, consideration of the enabling instruments and laws and a practice guide to commencing/defending oil and gas related suits and finally a consideration of the Petroleum Industry Bill.

1. TYPES OF DISPUTES IN THE OIL AND GAS INDUSTRY.

Disputes in the oil and gas sector the world over can span a range of subject matter, involving diverse parties. Some of these areas of disputes are outlined as follows: | * International and Local Maritime Boundary Disputes: With the increased demand for oil and gas and the uncertainty enshrouding oil prices in recent years, there has been a marked increase in disputes between Countries and also between states within Countries involving issues of territorial rights and resource ownership. An example of a local maritime boundary dispute is that in Attorney-General Rivers State v. Attorney-General, Akwa Ibom State & Anor (2011) LPELR-SC.27/2010, (2011) 8 NWLR (1248) 31. The case involved a dispute between the governments of Rivers State and Akwa Ibom State respectively over the allocation of 172 offshore oil wells within the sea boundary shared by both states. The parties had earlier in accordance with a Political Solution, in a meeting attended by the two states and the Federal Government, reached an agreement which was put down into writing and dated 31st October, 2006, that the two states would share the revenue accruing from the 172 oil wells at an even proportion of 50% each i.e. 86 oil wells to each party. However, in 2008 the Nigeria Boundaries Commission (NBC) and Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) on behalf of the Federal Government, unilaterally allocated all the oil wells to Akwa Ibom in line with a Historical Solution which had been a form of solution proposed in an earlier action in Court (AG Federation V. AG Abia (2002) 6 NWLR (Pt 764) 542) but which was however not granted as a form of resolution by the Supreme Court. It was on the basis of the action taken by NBC and RMAFC that Rivers State brought an action before the Supreme Court.The basis of the decision of the Supreme Court which was in favour of Rivers State was the principle of estoppel and other principles of law of Contract which were heavily relied upon in the lead judgment.| | * Disputes arising from State acts:|

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The Government i.e. National Government grants concessions or licenses to local and foreign investors to conduct oil and gas exploration and production. However, with the recent surge in oil prices, disputes have arisen as government introduces measures...
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