Ownership and control of oil resources

Feb 22, 2018 Letters

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Dear Editor,

Ownership and control of oil resources have been a major source of disagreement in many instances. Hence, certain theories have evolved over the course of time, to ascertain who owns and control crude oil. As stated before, ownership of oil and gas is a paramount topic in any discussion of petroleum, because it defines the extent of interest and rights that any person, individual or body has in crude oil.
OWNERSHIP THEORIES
Oil jurisprudence is defined as a specialised body or branch of law. The Black’s Law Dictionary, 8^th edition defines ownership as: “The bundle of rights allowing one to use, manage, and enjoy property, including the right to convey it to others”.  So that, an owner of a thing may grant to another person many or all his rights for a stipulated time period and still remain as owner. These issues have occupied the attention of the three major stakeholders namely: the government, the people and the oil companies.
ABSOLUTE OWNERSHIP THEORY
This theory states that the owner of a piece of land is regarded also as the owner of the petroleum lying underneath the land. Land in this regard includes everything down to the crux and up to the sky. It is however argued by Atsegbua that since oil and gas are fugacious substances and therefore wonder from one place to another beneath the surface of the earth, the fee simple or absolute ownership is defeatable. In English law, a fee simple or fee simple absolute is an estate in land, a form of freehold ownership. The word “fee” is derived from fief, meaning a feudal landholding.
Atsegbua by way of illustration states that once the oil leaves the property of A and settles under the land of B, then A no longer has claim to the petroleum, since only B now has ownership. This theory is now well recognised in the state of Texas in the United States of America. It states that petroleum (oil and gas) is capable of being owned in fee simple.
QUALIFIED INTEREST THEORY
This theory states that petroleum cannot be owned until it is captured and reduced into possession. It follows therefore that ‘A’s ownership of petroleum underneath his land is qualified. ‘A’ can also claim ownership of the oil and gas if he reduces them into possession. In the view of Atsegbua, this theory is derived from the concept of ferae naturae (i.e. wild animals); an analogy is often drawn between wild animals and petroleum.
Since in law, wild animals are not capable of being owned until they are captured and reduced into possession, it is also argued that petroleum being similar to wild animals, cannot be owned until it is reduced into possession. This analogy is false and has been discredited in North America where it was first propounded, as there is no similarity between wild animals and petroleum.
To Omorogbe this theory obtains in states such as California and Indiana in the United States of America.
Under this theory the land owner is said not to have title to the oil and gas in situ (Latin in the place of origin) because of the fact that he can be divested by drainage without consent and without any liability on the part of the person causing the drainage. However, he does have a property interest which is more than a right of capture.
All the landowners over a common reservoir are designated as collective owners, equal rights to take oil from the reservoir. The respective landowners do not have title to the specific oil and gas underneath their respective land. The effects of the two theories are similar in practical terms.
In both the absolute and the qualified theories the land owner is not in fact entitled to oil and gas beneath his land. What he has are the rights to sink as many wells as he desires subject to good operating practices, and to extract as much oil and gas as he can produce.
THE NON-OWNERSHIP THEORY
This theory states that petroleum is not capable of ownership since it is fugacious. In essence, since petroleum is like a fluid that can move from one place to another it cannot be owned in the strict sense of the word. There is not much support for this theory as modern practice show that petroleum though may move from one place to the other, is still subject to ownership by the person or authority that captures it at any particular point in time.
THE DOMANIAL SYSTEM
The Domanial Law System provides for the vesting of ownership rights in the sovereign. This is the most prevalent system of ownership of minerals. Practically every country, with the major exception of the United States, retains sovereign rights over all mineral deposits. In many of these countries this right is enshrined in their various legislations and constitutions, Guyana is included herein.
Venezuelan oil has not permeated Guyana’s soil because that country produces extra heavy crude oil, which is highly-viscous oil that cannot easily flow to production wells under normal reservoir conditions. Heavy crude oil is closely related to natural bitumen from oil sands; it is expensive to extract, transport and refine. It is referred to as “heavy” because its density or specific gravity is higher than that of light crude oil, which is possessed by Guyana, the term “light” indicates that the crude has less impurities.
Clairmont Featherstone

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