International Energy and Environmental Law - International Legal Developments Year in Review: 2023

This Article discusses significant legal developments in the areas of international energy and environmental law from 2023.

I. Angola

Executive Decree 78/23 approved the General Guidelines for the Preparation of the Rural Electrificatoin Plan with a goal of providing universal access to electricity by 2030 with an emphasis on the use of renewable energy. The Plan aims to provide power to areas of the country still lacking access to the electricity grid and which are not expected to be connected to it in the next ten years through the installation of small generating units (minigrids) or solar kits.

The oil and gas sector also saw important legal developments during 2023. By means of Joint Executive Decree 81/23, the rules and procedures concerning the definition and modification of the prices of crude and natural gas products have been amended, and a flexible price adjustment mechanism (taking into account the variations in the main factors conditioning the cost structure) was approved. Also, specific tax rules on transfer pricing for the New Gas Consortium project have been established by the means of Presidential Decree 158/23, to meet the project’s unique economic and commercial conditions, and in line with the implementation of measures aimed at improving the business environment and streamlining bureaucracy, the Regulations on the Licensing of Gas Stations were approved by Presidential Decree 173/23.

II. Gabon

In 2023, several environmental-related statutes were published including: (i) Ministerial Order 0017/MEFMEPCPAT/SG/DGEPF, which created the National Committee for the Global Environment Fund, entrusted with evaluating and improving the mobilization of resources from the Global Environment Facility for Gabon, and acting as advisory body to provide non-binding opinions on potential projects and funding requests; (ii) Decree 0020/PR/MEFMEPCPAT, on the facilities classified for environmental protection; and (iii) Decree 00291/PR/MEFMEPCPAT/MER, which created the Gabonese Fund for Strategic Investments, the agency in charge of commercializing the carbon credits generated in the country and belonging to the State.

In addition, the new articles of association of the Société Nationale des Hydrocarbures du Gabon, the “Gabon Oil Company” (GOC), have become available. In the capacity of the National Oil Company, GOC holds interests in different blocks and has a preferential right in direct and indirect transfers of interests in production sharing contracts. According to the new articles of association, GOC’s share capital has been increased to XAF eleven billion.

On the mining front, by means of Decree 0362/PR/MM, the General Directorate of Mines and Geology, which oversees conceiving and implementing the Government’s policy with respect to the exploration of mineral resources and the exploitation of mines and quarries, has been reorganized.

III. Portugal

In line with the international trends, by means of Decree-Law 11/2023 (Environment made Simpler), a “broad reform and simplification of the licensing on environmental matters” has been published. The aim of the reform is to “significantly reduce the administrative and regulatory burden faced by companies, with particular focus on the energy sector, in order to accelerate the energy transition (e.g., elimination of unnecessary or redundant acts, licenses, permits and processes).” The new statute includes measures pertaining to the environmental impact assessment, environmental license, permit for usage of water resources, and waste management.

IV. Republic of Congo

Law 3/2023 created the Oyo’s Center of Excellence for Renewable Energies and Energy Efficiency. The Center is responsible for conducting research, training and development relating to renewables and therefore is expected to contribute for the implementation of the energy transition in the country. In addition, with the enactment of Order 385, Congo sought to limit the effects of the increase of domestic premium fuel and diesel by approving several measures according to which the State would bear the costs with taxes and fees due to the connection of public transportation to people and goods.

V. Timor-Leste

Late 2022, through Resolution 35/2022, the Government approved the areas to be dedicated to mining activities, as well as the Terms of Reference (TOR) for the opening of a tender to award mining rights for exploration and production of construction materials in the three concession areas proposed by the Minister. Also, by means of Resolution 7/2023, the Government approved the opening of areas for the carrying out of mining activities in the country and the TOR of the tender for the award of mineral rights for the exploration and mining of metallic minerals, gemstones, industrial minerals, radioactive minerals, rare earth minerals, and coal in said areas.

In addition, the National Parliament ratified the Doha Amendment to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, adopted in Doha on December 8, 2012, through Resolution 1/2023.

Major changes in the organization of the Timor-Leste Energy and Natural Resources sector have been approved in 2023, including: (i) Decree-Law 59/2023, which approved a new Framework Law for the Ministry of Petroleum and Mineral Resources; thus adopting a more dynamic and efficient structure capable of meeting emerging technical requirements, particularly in terms of prospecting, exploration and marketing of petroleum and mineral resources, and other areas of growing interest in the energy sector, such as carbon capture and storage (CCS) and hydrogen have also been addressed for the first time; (ii) Decree-Law 60/2023, which amended the framework governing the Institute of Petroleum and Geology, to ensure a better knowledge of geological resources, including a vast number of research disciplines in the field of geosciences (geological mapping, oil prospecting, geotechnics, hydrogeology, etc.); and (iii) Decree-Law 61/2023, which amended the rules governing the National Oil Company, TIMOR GAP, E.P. focused on greater transparency and an increased focus on its core areas of activity, thus improving its efficiency. Moreover, the Government has decided to separate the mining and oil and gas regulatory roles and approved Decree-Law 62/2023, on the National Petroleum Authority and Decree-Law 63/2023, on the National Mining Authority.

VI. Norway’s High Court Decides Who Controls Svalbard Continental Shelf

On March 20, 2023, Norway’s Supreme Court ruled that a Latvian company cannot fish for snow crab on the continental shelf outside Svalbard and Norway has no obligation to share access rights to this area with contracting parties to the 1920 Svalbard Treaty. The ruling has implications for fishing, oil, and mineral rights at a time of increased global competition for Arctic resources. If Latvia had prevailed, all forty-seven signatory nations to the Svalbard Treaty would have equal access to the natural resources beyond territorial waters and on the continental shelf. Latvia or other High Parties to the Svalbard Treaty can still bring the dispute before an international court or tribunal.

Under the Svalbard Treaty, Norway is given “full and unrestricted sovereignty over the Svalbard archipelago” subject to the provisions that all parties enjoy “equally the rights of fishing and hunting in the territories […] and in their territorial waters” and can “carry on there without impediment all maritime, industrial, mining and commercial operations on a footing of absolute equality.”

Latvia argued that the text of the treaty provided a basis for a dynamic interpretation of “territorial waters” to comprise areas beyond the internal waters and territorial sea, thereby extending the Article 2 right of equality to those areas. Furthermore, Norway had set precedent when it expanded the territorial sea outside Svalbard from four to twelve nautical miles based on application of the 1982 United Nations Convention on the Law of the Sea (UNCLOS). The court disagreed and held Norway has full and exclusive sovereign rights on the continental shelf outside Svalbard that are not limited by the equality provision of Article 2.

VII. Guyana

To try to ensure a more equitable distribution of Guyana’s offshore oil and gas bonanza, a local content law has been in force after 2021. The law requires that all contractors, sub-contractors, and licensees operating in Guyana’s petroleum sector submit a Local Content Annual Plan that outlines detailed annual targets for procuring some forty different types of goods and services from Guyanese firms as well as in employment and capacity development. These targets range from requiring that at least five percent of higher complexity services must be provided by Guyanese businesses while the goal is 100 percent for general support services. In 2023, Guyana’s Attorney General announced plans to increase the list of goods and services as well as raising percentage targets. To qualify as Guyanese, at least fifty-one percent or more of a company’s share capital must be owned by Guyanese citizens, the business should be registered with the Guyana Revenue Authority, and a firm’s offices, plant or facilities need to be located in Guyana. The government claims that the Local Content Law has, to date, directed some $400 million to Guyanese businesses.

In 2023, the Centre for Local Business Development—the domestic capacity-building entity funded by the first consortium made up of ExxonMobil, Hess, and the China National Offshore Oil Corporation (CNOOC) to drill in Guyana—introduced an enhanced and upgraded digital platform for petroleum companies to connect with local suppliers of goods and services. The Centre works closely with the Local Content Secretariat to verify businesses on the platform are indeed “local.”

The National Assembly approved a Petroleum Activities Law in August 2023 that replaced Guyana’s former one-on-one negotiated Production Sharing Agreement (PSA) model to a standardized PSA framework for companies or consortiums wishing to bid on offshore blocks. The first auction utilizing the revised regime took place in September 2023. These agreements now include a ten percent royalty rate, a reduced cost recovery ceiling from seventy-five to sixty-five percent, and a 50/50 sharing of after cost recovery profits between the Guyanese government and the operators. The new law also facilitates approval of ExxonMobil’s proposal to build a pipeline to transport offshore natural gas to a mainland thermal plant for generating electricity. This development is expected to significantly reduce domestic electricity prices currently generated from imported fuel oil.

VIII. Suriname

Unlike Guyana, Suriname has had an active but limited onshore petroleum sector as well as refining capacity for decades that primarily meets domestic transportation needs. Most of Suriname’s electricity is generated from renewable hydropower. Suriname’s first deep-water oil and natural gas project was announced by TotalEnergies and its partner Apache Corporation or APA in September 2023. Both companies have already spent $1.3 billion on exploration and TotalEnergies expects to invest another $9 billion to bring production online. A field development plan has yet to be filed, however, and environmental authorizations have still not been approved. Accordingly, TotalEnergies does not expect to begin producing offshore oil until at least 2028. Under Suriname’s production sharing contract rules, the Surinamese state is entitled to a majority of net income derived from offshore activities including royalties, profit oil, and taxes. This arrangement is designed to facilitate participation by the Surinamese state oil company, Staatsolie, in this inaugural deepwater oil and gas project.

IX. Conclusion

These developments are promising for multiple industries. The legal frameworks and judgments are robust.

Co-editors of this article are Candace S. Chandra and Danielle Edwards; Authors of this article are Ricardo Silva, Sara Frazão, Madalena Osório, Judy Boyd and Thomas Andrew O’Keefe.