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    Slovenia Fears Croatia's Bidding Round Launch Would Jeopardize Maritime Dispute

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Summary

Following Croatia’s launch of its bidding round, Slovenia formulated an objection to any action that might jeopardize the maritime dispute between the states.

by: Karen Ayat

Posted in:

Natural Gas & LNG News, News By Country, Croatia, Slovenia, Top Stories, Balkans/SEE Focus

Slovenia Fears Croatia's Bidding Round Launch Would Jeopardize Maritime Dispute

Croatia launched its first offshore licensing round earlier in April of this year. Twenty nine blocks are on offer for international oil and gas majors interested in participating in the country’s offshore explorations. An investment in the order of USD 2.5 billion is needed in order to develop the hydrocarbon riches in Croatia’s EEZ in the Adriatic Sea. Production sharing agreements offered to bidders are with a five year exploration phase over a twenty-five year production period. While most of the blocks on offer are located in the central and southern part of the sea, eight of them are located further North in the Adriatic. Each block is between 1,000 and 1,600 square kilometres, the area on offer totalling 36,800 square kilometers.

Following Croatia’s launch of its bidding round, Slovenia formulated on April 2 via the Embassy of the Republic of Slovenia in Zagreb an objection to ‘the use of geographical maps of the Adriatic Sea that unilaterally prejudge the solution of the maritime border between Slovenia and Croatia included in the tender documentation for the offshore licensing round for licenses for the exploration and production of hydrocarbons’. The objection included the Republic of Slovenia’s intent to study the location of the blocks in the Northern Adriatic to ensure it does not prejudice with Slovenia’s interests. On April 3, Tadej Ruper, Director General for Bilateral Relations and European Affairs highlighted that the documentation published in relation to Croatia’s first bidding round include the Northern Adriatic, an area subject to the unresolved Slovenian-Croatian border dispute, reminding Croatia of its obligation to act in good faith and conform to the Article 10 of the Arbitration Agreement stipulating that ‘parties must refrain from any action or statement which might intensify the dispute of jeopardise the work of the Arbitral Tribunal’.

Since the breakup of Yugoslavia, Croatia and Slovenia have had several confrontations, the latest being the conflict over boundaries. The maritime border dispute had implications beyond the bilateral relations between the two countries as it complicated Croatia’s application to NATO and its accession to the EU. Things promised to take a turn in 2009 when the prime ministers of Croatia and Slovenia signed an agreement in Stockholm to resolve the dispute through arbitration.

Article 3(1) of the Arbitration Agreement provides:

“The Arbitral Tribunal shall determine:

(a) the course of the maritime and land boundary between the Republic of Slovenia and the Republic of Croatia;

(b) Slovenia’s junction to the High Sea;

(c) the regime for the use of the relevant maritime areas.”

Article 4 provides:

“The Arbitral Tribunal shall apply

(a) the rules and principles of international law for the determinations referred to in  Article 3(1)(a);

(b) international law, equity and the principle of good neighbourly relations in order to achieve a fair and just result by taking into account all relevant circumstances for the determinations referred to in Article 3(1)(b) and (c).”

The application of article 15 of UNCLOS will be critical for interested parties. The article stipulates that states with coasts adjacent to each other cannot extend their territorial sea beyond the median line every point of which is equidistant from the nearest point on the baselines from which the breadth of the territorial seas of each of the two states is measured. Exceptions exist in the case of an agreement between the two states or when it is necessary ‘by reason of historic title or other special circumstances to delimit the territorial seas of the two states in a way which is at variance therewith’. While the application of the principle would benefit the Republic of Croatia, the exception would be in favour of the Republic of Slovenia. Croatia, in its claim that the boundary should be an equal distance from each shore, seeks an application of the first sentence of the article.

The two parties submitted their second written pleadings in November 2013 in the arbitration concerning the territorial and maritime dispute between them according to a press release by the Permanent Court of Arbitration dated 18 November 2013. A hearing before the Arbitral Tribunal is to be held in the spring of 2014.

Karen Ayat is an analyst focused on energy geopolitics. Email Karen on ayat_karen@hotmail.com. Follow her on Twitter: @karenayat