In 2016, a key focus of stakeholder enquiries and activity was our involvement in Western Sahara, although in 2016 we had no active operations in the region. We hold a 20% non-operated interest in the Boujdour Maritime contract area offshore Western Sahara with a commitment for 3D seismic to be acquired by 2020, which will be conducted by the operating partner, Kosmos Energy.
In June 2016, the Norway Government Global Pension Fund announced its decision to exclude both Cairn and Kosmos Energy from their fund. The decision on exclusion was made on the basis of the recommendation of the Council on Ethics. In October 2016, BMO Global Asset Management (an investment fund management organisation) decided, on the basis of the same report, to exclude Cairn from the investible universe of BMO’s Responsible Fund range.
Western Sahara has been classified since 1961 as a “Non-Self-Governing Territory” by the United Nations. Both Morocco and the Saharawi Arab Democratic Republic claim Western Sahara as their sovereign territory. Cairn believes that hydrocarbon exploration offshore of the territory is consistent with international law. Resolution of the territorial status is not required for exploration as the UN 2002 Legal Opinion views Morocco as the territory’s administering authority and as such it can issue permits for resource development. The UN continues to mediate a process to resolve the dispute between Morocco and the Saharawi Arab Democratic Republic. In 2013, Morocco’s Economic, Social and Environmental Council, an independent constitutional body, launched intensive consultations in the region on how to properly manage the development of the region. Initial oil and gas industry activities in the area are focused solely on exploration and do not involve the removal of resources. The region remains economically underdeveloped. Cairn believes that the exploration for hydrocarbon resources will enhance economic development prospects for all people of the territory, with the possibility of greater private sector investment and job creation.
Responsible resource development can proceed in parallel with the UN-led discussions on the region’s future and the 2002 UN Legal Opinion provides for resource development to co-exist with the political process, as long as any such resource development is conducted for the benefit of the people of the territory.
The Joint Declaration of Principles signed by Kosmos Energy and the Government of Morocco states that local populations will benefit efficiently, effectively and transparently from production of hydrocarbons if commercially viable reserves are discovered.