Using International Laws to
Legally Start Oil and Gas Projects
Lesson Objectives
Define what is meant by the commencement of an oil and gas project in an
international context.
Identify key international laws and treaties that govern the initiation of oil and
gas projects (e.g., UNCLOS, BITs, ESIA requirements, and ILO Conventions).
Explain the step-by-step legal and regulatory process required to begin oil and
gas exploration and production under international legal frameworks.
Using International Laws to
Legally Start Oil and Gas
Projects
- Starting an oil or gas project means officially beginning activities like
exploring for oil or starting production.
- But before this can happen, certain important steps must be taken,
such as a company or government must first get all the legal
permissions, such as licenses, environmental approvals, contracts,
and agreements with communities.
- Before an oil or gas project can begin, both national and international
laws must be followed..
Using International Laws to
Legally Start Oil and Gas
Projects
- These laws ensure that:
• The country has the right to use the resources,
• The environment is protected
• Communities are respected, and
• International conflicts are avoided
Key International Laws and
Agreements in Oil and Gas
Project Commencement
United Nations Convention on the Law of the Sea (UNCLOS, 1982)
- This is a global law that explains how countries can use ocean
resources like oil and gas. It is very important for projects in the sea
(offshore projects).
- It provides that each coastal country (like Tanzania) has special rights
to explore and use natural resources in its Exclusive Economic Zone
(EEZ), which is up to 200 nautical miles from the shore and on its
continental shelf. No company or country can explore for oil or gas in
another country’s EEZ without permission. See Article 77 of UNCLOS.
Key International Laws and
Agreements in Oil and Gas
Project Commencement
- This provides legal certainty that a country like Tanzania, Nigeria, or Brazil,
for example, owns the oil and gas under the seabed off its coast and can
license companies to develop those resources.
- Also, UNCLOS imposes environmental obligations on states for activities in
the ocean. That, states must protect the marine environment, meaning
offshore oil operations must take measures to prevent oil spills and pollution
of the sea.
- If a project could affect another country’s waters (for instance, if an oil spill
might drift across borders), UNCLOS would require cooperation and
notification. Overall, UNCLOS is fundamental for any offshore oil/gas
project’s commencement because it confirms who has the right to exploit a
given offshore area, under what conditions, and with what responsibilities.
Key International Laws and
Agreements in Oil and Gas
Project
Commencement
Bilateral Investment Treaties (BITs) and Investor Protection
- Bilateral Investment Treaties (BITs) are agreements made between two countries
to protect investments from one country made in the other.
- Many oil and gas projects are funded by foreign investors, so these treaties help
protect those investors when they bring their money into a country like Tanzania.
- BITs provide legal protections to investors. That, a foreign oil company must be
treated fairly as equally as local companies. The government cannot take over (or
nationalize) a foreign-owned oil project without following the law and paying
proper compensation. If the government breaks the rules, the investor can sue
the country through international courts, not just local courts, ie International
Centre for Settlement of Investment Disputes (ICSID) which is an international
arbitration court.
Key International Laws and
Agreements in Oil and Gas
Project Commencement
- Almost all major oil-producing states (including Tanzania, Uganda, and
Nigeria) are members of the ICSID Convention, meaning they recognize and
enforce arbitral awards.
- This is crucial at commencement because companies need assurance that
once they start developing an oilfield, it won’t be taken away without
compensation.
- For instance, In 2022, Italy banned oil drilling near its coastline. A UK
company, Rockhopper, had already invested money in an offshore oil
project. The company sued Italy under an energy investment treaty and
was awarded €190 million in compensation. This shows how investors can
claim money if a government changes policies after a project has begun.
Key International Laws and
Agreements in Oil and Gas
Project Commencement
- Therefore, before starting a project, oil companies must be sure that
the government will not take away the project unfairly, if there are any
disputes, they can use international courts and their contracts and
investments are protected. This encourages foreign companies to invest
in oil and gas development.
Key International Laws and
Agreements in Oil and Gas
Project Commencement
Paris Agreement and Climate Change
- The Paris Agreement (2015) is a global treaty aimed at reducing the
world’s greenhouse gas emissions to fight climate change. Each
country, including Tanzania, Uganda, and Nigeria, has its own goals
called Nationally Determined Contributions, NDCs under this treaty.
- New oil projects produce a lot of emissions. So, before starting such a
project, governments must ask whether this project is in line with our
climate goals and will it increase emissions or make climate targets
harder to achieve.
Key International Laws and
Agreements in Oil and Gas
Project Commencement
-To balance development and climate goals, the Agreement requires
the use of cleaner technologies, climate impact assessments, or
introduce carbon offset programs (planting trees, etc.) as it aims at
helping countries reduce harmful emissions.
- Paris agreement doesn’t forbid specific new oil projects, rather
creates a global climate accountability framework.
- That, each country should sets its own targets (Nationally Determined
Contributions, NDCs) for reducing greenhouse gas emissions.
Key International Laws and
Agreements in Oil and Gas
Project Commencement
Convention on Biological Diversity
- This convention requires countries to ensure projects don’t threaten
protected ecosystems or endangered species, so a new oil project near
a sensitive habitat might face international scrutiny.
International Labour Standards
and Stakeholder Rights in Oil
and
-
Gas Project
Oil and gas projects affect many people, not just workers, but also local communities
near the project area.
- International rules, especially those set by the International Labour Organization (ILO)
(via its conventions), help protect these people’s rights and ensure fair treatment from
the start of a project. For instance;
International Labour Organization Core Labour Conventions
These are basic labor standards that all international oil and gas companies must follow.
They include;
• No forced labor
• No child labor
• Fair and safe working conditions
• Right to form workers' unions
International Labour Standards
and Stakeholder Rights in Oil
and Gas Project
- These rules make sure that workers are treated fairly, especially in project
construction and operations.
ILO Convention No. 169 – Indigenous and Tribal Peoples
- This convention is important if the oil project is located in or near indigenous
communities (tribal groups with ancestral land). According to this law;
• Governments must consult indigenous people before starting any project on
their land.
• Indigenous groups must give Free, Prior, and Informed Consent (FPIC) before
the project starts.
• Indigenous people must get fair compensation and a share of project
benefits.
International Labour Standards
and Stakeholder Rights in Oil
and Gas Project
- Besides indigenous people, all local communities affected by oil and
gas projects have a right to;
• Be consulted before a project begins.
• Get clear information about the project.
• Be part of discussions on issues like relocation, if they must move,
Compensation, if their land is used, Cultural heritage protection, if
sacred places are affected.
- This right forms part of international best practices.
International Labour Standards
and Stakeholder Rights in Oil
and Gas Project
- So, when beginning an oil and gas project, companies must;
• Train and protect workers,
• Respect indigenous and community rights,
• Conduct human rights impact assessments, and
• Develop proper stakeholder engagement plans.
- If these steps are ignored;
• People may protest or resist the project.
• The company may suffer reputation damage.
• Legal action can be taken in international courts.
Legal Steps to Start an Oil and
Gas Project
Securing Exploration Rights and Legal Jurisdiction
- A government or company should get legal permission to search for oil/gas.
It should get a license for searching. If it is on land the
company/government has to make sure land is not part of a boundary
dispute. And If at sea; it has to confirm the area is within your country’s
maritime zone under UNCLOS.
Early Studies and Consultations
- Companies conduct seismic surveys, technical studies, and talk to local
leaders to find whether area is environmentally sensitive to take a caution.
This step sets the foundation for proper planning, community engagement
and Identification of environmental or cultural sensitivities.
Legal Steps to Start an Oil and
Gas Project
Environmental and Social Impact Assessment (ESIA)
- A detailed study must be done before the project starts. It assesses
environmental risks (e.g., spills, deforestation), social effects (e.g.,
displacement, loss of farmland), Climate impact (especially under the
Paris Agreement) and public consultation is required as people must
be informed and allowed to share opinions.
- The ESIA report is submitted to a national regulator (e.g., NEMC in
Tanzania). If approved, an Environmental Certificate is issued. This is
mandatory before starting construction.
Legal Steps to Start an Oil and
Gas Project
Final Legal Agreements and Contracts
- After confirming that oil/gas is present, companies apply for a
production license. The license includes; duration (e.g., 25
years),taxes, royalties, Local content rules and Investor protection
clauses.
- If international investors are involved, BITs (Bilateral Investment
Treaties) and stabilization clauses protect them from unfair treatment.
For cross-border projects (like pipelines), countries must sign
Intergovernmental Agreements (IGAs).
Legal Steps to Start an Oil and
Gas Project
Financing and International Compliance
- Projects need money from banks or international agencies. Banks
require projects to follow international environmental and labor
standards. ILO labor standards must be followed such as no child labor,
fair wages, worker safety, etc
Land Acquisition and Stakeholder Engagement
- Companies must negotiate land access, pay fair compensation, offer
resettlement (if needed), set up grievance mechanisms for complaints.
Special attention is needed if indigenous communities are present. They
must give Free, Prior, and Informed Consent (FPIC). Failure to consult
properly can cause international complaints and project delays
Legal Steps to Start an Oil and
Gas Project
Final Regulatory Approvals
- Authorities should issue a Petroleum Development License after
checking; Environmental approval, Financing in place, Stakeholder
plans completed, International treaty obligations respected.
- This license gives the final legal green light.
Final Investment Decision (FID) and Start of Work
- Investors and government decide to begin full operations. Contractors
are hired, construction starts (e.g., drilling, building pipelines).
Monitoring continues ie banks or civil society may check compliance.
Legal Steps to Start an Oil and
Gas Project
Continuous Compliance (Post-Commencement)
- Even after the project begins, companies must;
• Report on environmental impact,
• Respect local laws and international rules,
• Submit financial reports (e.g., through EITI)
- For any oil or gas project to start legally and successfully, each legal step must
be followed ; from exploration licenses to ESIA to final approvals. International
laws act as a guide ensuring fair treatment, environmental safety, and human
rights. Ignoring any step can lead to legal delays, international lawsuits, or
community resistance.
