Moratorium on Oil Exploration Harken Energy, Costa Rica

After more than a decade of legal struggles coupled with the mobilization of the local population and the civil society, the sentence from late 2014 left Harken Energy with no compensation for the annulment of its oil concessions along Costa Rica coasts.


Description
In 2000, Harken Costa Rica Holdings LLC, subsidiary of the U.S. Harken Energy, received a 20-year concession to look for and exploit offshore oil resources in the province of Limn, 188 kilometers northeast of San José. Local fishermen, environmentalists and indigenous groups opposed the future potential Harken’s activities since they would endanger the coral reefs and mangrove swamps.  In 2002, a moratorium on oil exploration came into effect, halting drilling activities in Costa Rica, after sustained pressure from civil society. On September 16th 2003, the Texan multinational Harken Energy filed a claim with the International Centre for Settlement of Investment Disputes (ICSID), an institution of the World Bank Group based in Washington, D.C., for US$57 million compensation from the Government of Costa Rica, for loss of potential earnings. The claim is opposed by social movements and environmentalists, who dispute the legitimacy of the claim. The complaint was also opposed by the Minister of Environment because the North-American oil company did not even try first to resolve the dispute through local and national judicial instances.  Harken Energy later withdrew its claim to the ICSID and desired to reach an out-of-court agreement, which failed because of Costa Rican government firm opposition to compensate the oil company. So in October 2005, Harken brought the case to the Costa Rican jurisdictions asking for the annulment of the Resolution 019-2005-P-MINAE which invalidates the oil concessions previously granted to the oil company. Harken Energy also demanded the payment of compensations for the prejudices suffered. In December 2014, the Contentious Administrative Court settled in favor of the Costa Rican Government. The Central America Free Trade Agreement (CAFTA) signed on May 24th, 2004, between the US and five Central American countries, of which Costa Rica, weakens future possibilities for environmental regulations. CAFTA investors’ protection allows multinationals to directly appeal to international arbitration without having primarily to pass through national jurisdictions. Still international arbitrations are renowned for easily leaning in favor of multinationals’ interests. In case of new disagreements with multinational operating on its territory, the Costa Rican government is no more able to require for first sorting out the dispute through the national jurisdictions as it was the case in the dispute with Harken Energy.
Basic Data
NameMoratorium on Oil Exploration Harken Energy, Costa Rica
CountryCosta Rica
ProvinceSan Jose
SiteTalamanca area
Accuracy of LocationMEDIUM regional level
Source of Conflict
Type of Conflict (1st level)Fossil Fuels and Climate Justice/Energy
Type of Conflict (2nd level)Oil and gas exploration and extraction
Specific CommoditiesCrude oil
Project Details and Actors
Type of PopulationUnknown
Start Date12/1999
Company Names or State EnterprisesHarken Costa Rica Holdings LLC (HCRH) from United States of America
Harken Energy from United States of America
MKJ Xploration from United States of America - sold its Costa Rican interests to Harken Energy
Relevant government actorsEnvironment Ministry's Technical Secretariat (SETENA) - Costa Rica, Municipality of Talamanca - Costa Rica, Contentious Administrative Court - Costa Rica
International and Financial InstitutionsThe World Bank (WB)
International Monetary Fund (FMI)
International Centre for Settlement of Investment Disputes (ICSID) from United States of America - Harken's claim against the Costa Rican government, later withdrawn
UNESCO - United Nations Educational, Scientific and Cultural Organization (UNESCO)
Environmental justice organisations and other supportersAction for Anti-Oil Struggles (Acción de Lucha Antipetrolera : ADELA) - Costa Rica, OIlwatch Costa Rica, Asociación de Ecología Social Costarricense (AESO)
The Conflict and the Mobilization
Intensity of Conflict (at highest level)LOW (some local organising)
When did the mobilization beginPREVENTIVE resistance (precautionary phase)
Groups MobilizingFishermen
Indigenous groups or traditional communities
Local ejos
Local government/political parties
Social movements
Forms of MobilizationCreation of alternative reports/knowledge
Development of alternative proposals
Public campaigns
Impacts
Environmental ImpactsPotential: Air pollution, Biodiversity loss (wildlife, agro-diversity), Fires, Global warming, Soil contamination, Oil spills, Deforestation and loss of vegetation cover, Surface water pollution / Decreasing water (physico-chemical, biological) quality, Groundwater pollution or depletion
Otherpotential impacts on mangroves and coral reefs
Socio-economic ImpactsPotential: Loss of traditional knowledge/practices/cultures, Militarization and increased police presence, Land dispossession, Lack of work security, labour absenteeism, firings, unemployment, Loss of livelihood
Outcome
Project StatusStopped
Pathways for conflict outcome / responseInstitutional changes
New legislation
Strengthening of participation
Development of AlternativesThe Town Hall of Talamanca declares itself a territory free from oil exploration.
Do you consider this as a success?Yes
Why? Explain briefly.A moratorium on oil exploration came into effect, halting drilling activities in Costa Rica, after sustained pressure from civil society. And the multinational company received no compensation for it.
Sources and Materials
Legislations

International Labour Organisation (ILO) Indigenous and Tribal People Convention #169

1994 hydrocarbons law, designed to comply with World Bank and IMF-sponsored structural adjustment programs

U.S.-Central American Free Trade Agreement (CAFTA) signed in May 2004 between the US and Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua
[click to view]

Resolution 019-2005-P-MINAE by Costa Rican government which invalidates oil drilling concessions to Harken

Sentence No. 1754-2014, December 2014 in favor of the State (vs. Harken Energy)
[click to view]

References

El alto costo del petroleo barato. World Rainforest Movement, 2000
[click to view]

Las empresas petroleras: las nuevas socias de las Naciones Unidas. Oilwatch, 2002
[click to view]

Guerra y petroleo: artifices de la historia del siglo XX. Oilwatch, 2002
[click to view]

Moratoria a la exploracion y explotacion de hidrocarburos en areas naturales protegidas. Oilwatch, 2006
[click to view]

Actividades hidrocarburiferas en areas protegidas. Oilwatch, 2003
[click to view]

The threat to the environment from the Central America Free Trade Agreement (CAFTA): The case of Harken Costa Rica Holdings and offshore oil by Friends of the Earth and NRDC
[click to view]

Ecological debt and oil moratorium in Costa Rica, Oilwatch Costa Rica, August 2005
[click to view]

Resolution 248-2008
[click to view]

Sentence No. 1754-2014
[click to view]

Links

Grupo Adela
[click to view]

Harken oil versus Costa Rica, Ecologist, 34 :4, May 2004
[click to view]

Pacheco Stands Firm Against Oil Drilling, Adela, 10/10/2003
[click to view]

Free trade agreement threatens Costa Rican environmental protections, N. Martinez, 27/03/2004
[click to view]

Costa Rica: Oil extortion, WRM's bulletin Nº 75, October 2003
[click to view]

Costa Rica gana batalla legal contra petrolera, E & N, 17/12/2014
[click to view]

Mal precedente sería pagar a Harken, Semanario Universidad, 12/02/2004
[click to view]

Costa Rica gana juicio a petrolera Harken, Federacion Ecologista, 16/12/2014
[click to view]

Media Links

David derrota a Goliat: Harken fuera de Costa Rica, 4/03/2015
[click to view]

Other Documents

Protest organized by oilwatch and ADELA in February 2004 during Harken's representative Robert Torricelli's visit Source: http://semanariouniversidad.ucr.cr
[click to view]

Meta Information
ContributorLucie Greyl & Camila Rolando Mazzuca
Last update16/02/2016
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