"LEGISLATION ON OIL EXPLORATION AND PRODUCTION IN THE DUTCH CARIBBEAN"

July 21, 2009 7:39 AM

There is an increasing interest of International companies to explore and extract natural gas and petroleum in parts of the Caribbean sea area where Curaçao and Bonaire are situated. This is a positive development as this could give the economies of the Dutch Caribbean a significant boost and add to the worlds proven reserves.

An ongoing discussion is whether or not there are oil reservoirs in the grounds of the waters of the Dutch Caribbean, particularly along the coast of Curaçao. As a result hereof comprehensive legislation regarding oil exploration and production in the Dutch Caribbean is required in order to take research further and test drilling could be carried out. Apart from the National Ordinance on Petroleum Saba Bank of 13 December 1976 (Petroleum Landsverordening Saba Bank) that regulates the exploration and production of petroleum in or on the Saba Bank area2, no legislation is yet in place regarding the oil exploration and production with respect to other parts of the Dutch Caribbean, with the exception, however, of Aruba. A National Ordinance on Petroleum does exist in Aruba. “The Petroleumlandsverordening zeegebied Aruba 1987” contains the regulations regarding the petroleum exploration and production in the sea area around Aruba.

As the Government wishes to stimulate the search for oil in the Dutch Antilles a draft National Ordinance on petroleum exploration and production in the sea area around the Leeward Islands (Curaçao and Bonaire) is presently being considered by the Dutch Antilles Parliament. This draft National Ordinance corresponds with the National Ordinance on Petroleum Saba Bank, and has the following important stipulations.

The exclusive rights for the exploration and the production of petroleum in the sea area of the Leeward Islands will be held by a government owned company, an N.V. (public limited liability corporation). The draft National Ordinance stipulates that this N.V. will be established by a National Decree. The shares in this N.V. are held by the Government of the Dutch Antilles together with the island territory of Curaçao and the island territory of Bonaire3. The shares in this N.V. cannot be transferred to third parties. This will enable the Government of the Dutch Antilles to use possible proceeds from the exploitation or production for public community services.

The N.V. is entitled to enter into agreements with third parties regarding the exploration and production of petroleum in the sea area of the Leeward Islands. Due to the fact that exploration and production of petroleum is a high risk investment, it is most likely that services of third parties - large oil companies - will be utilized. Agreements with third parties will however be subject to the approval of the Minister for General Affairs and Foreign Affairs.

The draft National Ordinance also contains the Protocol between the Dutch Caribbean and Aruba established in 1985, concerning the exploration, production of petroleum and the division of proceeds originated from seabed resources. With the dissolution of the Netherlands Antilles ahead, no decision has yet been made regarding the division of the shares in the government owned N.V. when Bonaire, Saba, and Sint Eustatius will become a direct part of the Netherlands as special municipalities. The government however will be discussing this matter with the Island Executives of the islands.

There is an existing treaty regarding the delimitation of the maritime and underwater areas between Venezuela and the Kingdom of the Netherlands also applicable to the Dutch Antilles, “Boundary Delimitation Treaty between the Republic of Venezuela and the Kingdom of the Netherlands, 31 March 1978”. This treaty is of great importance as the sea borders between Venezuela and the Dutch Antilles (Leeward Islands) are established in this treaty.

The possibility of petroleum exploration and production in the Dutch Antilles is an interesting and important development for the Dutch Caribbean islands, therefore it is of significant importance that comprehensive legislation will be established concerning this matter as soon as possible.

For more information, please contact Sensie Mourik of VanEps Kunneman VanDoorne ( This email address is being protected from spambots. You need JavaScript enabled to view it. ).

(Source: www.ekvandoorne.com)

July 21, 2009