>> download as PDF file

Kerr-McGee Corporation

One of the largest US oil and gas companies A familiar face to international legal dispute and nuclear spills scandals

• According to its website¹, "Kerr-McGee Corporation is a global energy and inorganic chemical company based in Oklahoma City. [KMG is] a recognized leader in oil and natural gas exploration and production. [It is] also the world's third-largest producer and marketer of titanium dioxide pigment, the preferred whitener and opacifier for a variety of everyday products. Kerr-McGee was founded in 1929 and [its] stock has been traded on the New York Stock Exchange since 1956. We have global assets of more than $14 billion [assets at September 30, 2004: $ 14,5 bln -E&P $12,2 billion, Chemical $ 1,6 bln, other $0,7 bln]. In addition, [it supplies] titanium dioxide pigment to customers in about 100 countries. KMG and Westport Resources Corp. merged on June 25, 2004, creating one of the largest independent oil and gas companies in the U.S. The end-of-year 2003 proved reserves from the combined companies is more than 1.3 billion barrels of oil equivalent".
• KMG produces oil and natural gas from the Gulf of Mexico, onshore USA, UK sector of the North Sea, China’s Bohai Bay. Currently, KMG is conducting exploration activities in offshore Alaska, Australia, Bahamas, Brazil, Canada and "Western Africa" (i.e. Western Sahara- cf. KMG website).
• KMG has approximately 63 million gross undeveloped acres, with more than 55 million acres in global deepwater locations (half of which are in WS) as of June 2004.
• 4,638 employees. 
• Initially involved in the nuclear weapons industry: KMG was charged with numerous instances of radioactive pollution. This led to the infamous killing of an employee, Karen Silkwood, in 1974 as she was about to reveal to the US media the radioactive pollution caused by the company’s weapons plant in Oklahoma City. This incident received widespread publicity following its adaptation into a movie, Silkwood, with Meryl Streep.
• A familiar face to international legal disputes and illegal exploitation as attests its contested involvement in the Timor Gap (a Western Sahara "twin case").

What’s the scandal about?

Contracting with an illegal occupying power Active in an occupied territory in total disrespect of international law and of the wishes and interest of the indigenous Saharawi people Total lack of transparency of its activities

 

• Kerr-McGee du Maroc Ltd., a subsidiary of Kerr-McGee Corporation, entered into a reconnaissance permit (a 1-year extensible license) with the Moroccan state oil company, ONAREP/ONYM², in September 2001 for the Boujdour area, offshore occupied Western Sahara. The permit was renewed in October 2003 and on 19 October 2004 (valid until 1^st May 2005). A "detail": Western Sahara has been illegally occupied by Morocco since 1975 (cf. below).
• Object of the contract: to evaluate the potential for hydrocarbons in the offshore area through collection and analysis of seismic data. The contract covers 27 million acres, 350 miles along the coast and 200 miles offshore.
• Official backing by US government: KMG license signed in the presence of US Ambassador to Morocco, Margaret Tutwiler.
• Financial component of deal? French Oil Company Total stated that Total’s similar contract with ONAREP included financial provisions to the state-owned company³. What about KMG?
• KMG has refused to answer information requests by concerned individuals, NGOs and the Saharawi representatives.

Latest developments

Subcontracted reputable companies, which under moral pressure from global civil society groups ended their co-operation with KMG Continues investing in illegality Continues violating international rules

  

• Subcontracted TGS Nopec⁴ (Norway) and the Fugro group⁵ (NL) for the seismic mapping. Both companies after pressure from global WS solidarity movement pledged not to resume activities in the area. Most recently, a TGS Nopec subcontractor, Norwegian offshore company Thor also expressed its regrets of having worked in the area and pledged not to resume activities in WS.
• KMG has announced its intention to invest "at least US$ 2 million in the Boujdour area"⁶.
• John Christiansen, KMG External Communications Specialist Kerr-McGee, stated in December 2004 that KMG "is continuing to perform geological and geophysical studies, which include interpretation of the existing seismic and the drop core program that already has been performed".
• According to experts, drop coring is a technique whereby a device is ‘dropped’ off the back of a survey vessel and on contact with the seabed a piston in the device is activated and takes a shallow ‘core’ (a cylindrical section of the seabed, up to a metre or so in thickness). This core is retained within the device (preserved from the atmosphere/sea) and then hauled back to the surface. Cores are taken either acquired in a random pattern over the acreage or located over anomalies that are seen on the seismic. These samples are then analysed under laboratory conditions to detect minute indications of hydrocarbons.
• Taking core samples from the seabed within WS continental shelf is contrary to international law. Resolution III of the 1982 Law of the Sea Convention (as a scheduled document to and forming part of the LOSC) and customary law require the sharing of the information resulting from (i) the seismic survey, (ii) the drilling programme with the people of a non-self determined territory, as is the Saharawi people.

KMG public statements

Blatant lies Disrespect for UN rules and opinions Lack of transparency

• KMG website refers to the area as an "undeveloped lease-holding" in Morocco⁷ in spite of the fact that no country world-wide or the UN has recognised the sovereignty of Morocco over the territory.
• KMG Director of Corporate Communications stated that the "UN Under-Secretary for Legal Affairs confirmed that [the company] had acted lawfully in contracting with Morocco. Neither the United States of America nor the UN recognises any other administrative authority or government in that territory"; "Kerr-McGee continues to support the ongoing efforts of the UN to find a permanent and amicable solution to the WS issue. We hope to be able to make a contribution to the development of this area and its people. It would be inappropriate to speculate about what the future may hold in this area"⁸. Note: Saharawi people have not yet seen any traces of KMG "efforts"!
• KMG refused to answer requests from concerned individuals, NGOs and the UN recognised Saharawi national liberation movement, Polisario.

KMG corporate ir-responsibility

Window-dressing CSR: KMG totally disregards its CSR policy

  

• Its website states "At Kerr-McGee, our values influence everything we do. We are committed to quality, safety, environmental responsibility and ethical conduct".
• The cornerstone of its code of conduct is described as "compliance with the law". On an ethical level, under the section "International Political Activity", the KMG code notes that "the company is committed to meeting high ethical standards in its world-wide operations. This includes treating everyone fairly and with respect, maintaining a safe and healthful workplace, and improving the quality of life wherever Kerr-McGee does business".
• Its code of conduct and ethics defines the fundamental principles which "guide [its] business conduct and help [its] employees perform with integrity": respect for the individual, ethical business dealings, safe working practices, responsible corporate citizenship, responsible care for the environment and continuous improvement.⁹
• Its reporting system in case of suspected violations of the Code of Ethics includes an anonymous and confidential hotline and affirms that violations of the code are considered "serious offences that may result in disciplinary action, up to and including discharge, as well as possible legal action or penalties".

The Saharawi liberation movement-the Polisario, and the oil licenses

KMG threatens the UN peace process KMG denies the UN-recognised legitimacy of the Saharawi representatives

• The Saharawi Arab Democratic Republic (hereafter SADR) (hereafter SADR) representative Kemal Fadel said "this territory is still on the UN list as a non-self governing territory, it is a de-colonisation issue and the UN mission is present in the territory"¹⁰. He noted that his government was not against companies investing in WS but "it has to be done with the people who have a right to deal in the territory, with Saharawis themselves not with Morocco".
• SADR/ Polisario representative at the UN Ahmed Bukharie said that the SADR would "blacklist those companies that participate in the E & P of any kind in our Exclusive Economic Zone and if we have to resume the armed struggle the arena would include the sea and offshore areas". He also warned, "There was no guarantee" that the companies’ investments would be recovered¹¹.
• SADR/Polisario signed a technical cooperation agreement with UK-Australian E & P company Fusion Oil (announced 27 May 2002). Fusion was to evaluate the petroleum potential and to undertake an exclusive study and report on oil and gas prospectivity offshore WS. The deal covered the entire offshore territory of WS, i.e. 210,000 km2. Upon completion of the study, Fusion Oil would have the right to nominate up to three areas of unexplored offshore acreage (of up to 20,000 km2) for future exploration licensing on regionally competitive terms, "once WS is a member of the UN"¹². According to Fusion's exploration director Jonathan Taylor, "any exploration licenses will be converted into full exploration licenses dependant on the outcome of the UN mission, which will determine the future status of Western Sahara".
• Fusion signed a deal with Premier Oil in May 2003 "to purchase a number of West African interests" including 35% of Fusion's rights under the TCA with the SADR.
• SADR FM Mohamed Salem Ould Salek sent letter to Norwegian MoF Foss a letter expressing concern of unethical engagement of Norwegian government in WS through its investment in KMG and calling Oslo to disinvest from company on ethical grounds (cf. http://www.arso.org/FPLetterNO.htm ).

Background on Western Sahara and hydrocarbon exploration

Western Sahara

An occupied territory since 1975 The last African territory to be decolonised 2/3rd of a nation in refugee camps for nearly 30 years A daily reality of heavy-handed military occupation, large-scale human rights violations, mass corruption and plundering of natural resources Occupation to be financed by oil exploitation

 

• In total disrespect for international law, Morocco invaded its Southern neighbour, the former Spanish colony of Western Sahara in 1975. Ignoring repeated international sanctions and requests, Morocco has heavily colonised (US State dept. evaluate the presence of at least 250,000 settlers), plundered the resources (e.g. fisheries, phosphates) and heavily repressed the local, indigenous population (according to Amnesty International and Human Rights Watch reports). Morocco has thwarted all efforts of the MINURSO, the UN Mission in the territory, to organise the UN requested referendum of self-determination for the last African territory yet to be decolonised.
• Past exploration: over the second half of 20^th century, oil and gas companies have shown sporadic interest in the Western Sahara territory, which has fed many rumours about the existing hydrocarbon reserves. However, the protracted territorial dispute and the related legal uncertainties of investing in the area diverted the attention of major oil players away from the territory (including Gulf Oil, WB Grace, Texaco and Standard Oil, Pan American Hispano Oil, Caltex, Gulf Oil, Philips Oil and BP, Shell).
• The exploitation of Saharawi resources is at the very heart of the occupation of the territory since it both contributes to financing the costly occupation and represents a key element in sustaining loyalty to the monarchy. The extensive depletion of fisheries in Saharawi waters and of the phosphate deposits has encouraged Morocco to look for alternative sources of revenue: Saharawi oil and gas is the lifesaver of the corrupt feudal Moroccan monarchy and of its occupation of the territory.
• Moroccan Energy and Mines Minister Boutaleb stated that exploitation of oil in Western Sahara is "not a problem. It’s simply our country and His Majesty the King is committed to developing Morocco, so there is no question or illegal aspects to exploration and development there"¹³.

The United Nations and the Western Sahara

A territory to be de-colonised under a UN-sponsored resolution process An occupation recognised by not one singly State Efforts of a UN Mission in WS since 1991 stymied since 1991

 

• Western Sahara remains on the UN list of non autonomous territories. For the IVth UN Decolonisation Commission, Spain, as the administrative power defined under article 73 of the UN Charter, continues to be responsible for the fate of the territory, which remains to be de-colonised.
• No country has officially recognised the annexation of the territory by Morocco while the SADR has been recognised by more than 70 nations (including most recently by South Africa in October 2004).

International case law and the Corell opinion

Morocco has no legitimate sovereignty over Western Sahara The Saharawi people has a universal and permanent right over the natural resources in their territory KMG must respect the wishes and interest of the Saharawi people

  

• The law applicable in this matter is based on Article 73 of the UN Charter and a series of documents and practice developed by the UN (especially by the Special Committee and UNGA). Article 73 states that Administrative Powers by their status have "recognised the principle that the interests of the inhabitants of these territories are paramount" and have accepted "as a sacred trust the obligation to promote to the utmost […] the well-being of the inhabitants of these territories".
• The Corell Under-Secretary General for Legal Affairs, the Legal Counsel, Hans Corell on 29 January 2002¹⁴ responding to a request from the President of the UNSC on behalf of the SC members on "the legality in the context of international law, including relevant resolutions of the Security Council and the General Assembly of the United Nations, and agreements concerning Western Sahara of actions allegedly taken by the Moroccan authorities consisting in the offering and signing of contracts with foreign companies for the exploration of mineral resources in Western Sahara", provided his opinion on "the status of the territory of Western Sahara and the status of Morocco in relation to the territory" as well as an analysis of the principles of international law governing mineral resource activities in Non-Self-Governing Territories (hereafter NSG).
• Corell first states that the Madrid Agreement and the subsequent notification by Spain to the UNSG of the relinquishing of its responsibilities have no legal founding and that "Spain alone could not have unilaterally transferred" its status of administrative power. As a result, Corell notes that the international status of Western Sahara remains that of NSG territory and that, while "Morocco has administered the territory alone since 1979", it is not listed as the administering power of the territory in the UN list of NSG territories.
• The UN Legal Counsel enlists the developments in international law applicable to mineral resource activities in NSG territories. In brief, he notes that Administrative Powers must ensure that all economic activities in NSG territories do not adversely affect the interests of the peoples therein but are directed towards assisting them in the exercise of their right to self-determination (§10); and that any administrative power that deprives the colonial peoples of NSG territories of the exercise of their legitimate rights over their natural resources violates the solemn obligations it has assumed under the UN Charter (§ 11).
• The Legal Counsel then observes that the doctrine regarding the exploitation of natural resources has evolved and refers in particular to a resolution of 6 December 1995 (50/33) which drew a distinction between economic activities that are detrimental to the people of these territories and those directed to benefit them (paragraph 12). In that same resolution, UNGA stated the "value of foreign economic investment undertaken in collaboration with the peoples of NSG territories and in accordance with their wishes in order to make a valid contribution to the socio-economic development of the territories". The Legal Counsel notes that such an evolution in the doctrine was confirmed in later resolutions¹⁵.
• Hans Corell then refers to the principle of "permanent sovereignty over natural resources", which was established by UNGA in 1962 and also reaffirmed in subsequent resolutions¹⁶ as well as in international conventions such as the 1966 ICCPR and ICESCR. This principle, which as the UN Legal Counsel notes "is indisputably part of customary international law" yet "its exact legal scope and implications are still debatable", consists in the "right of peoples and nations to use and dispose of the natural resources in their territories in the interest of their national development and well-being" (§ 14).
• Using the ICJ cases of East Timor and Nauru Phosphates, Corell concludes that mineral resource activities in a NSG territory by an administering power is illegal "only if conducted in disregard of the needs and interests of the people of that territory" (§ 21).
• The UN Legal Counsel goes as far as noting the existence of an "opinio juris " (§ 24): resource exploitation activities in NSG territories are compatible with international law when they are conducted "for the benefit of the peoples of these territories, on their behalf or in consultation with their representatives". This applies both to administering powers and third states.
• Corell refers not only to mineral resources but also to "economic activities in NSG territories in general and mineral resource exploitation in particular"¹⁷, thereby confirming that the international doctrine applies to all types of natural resources.
• Regarding the specific exploration contacts signed by Rabat, Corell states that "if further exploration and exploitation activities were to proceed in disregard of the interests and wishes of the people of WS, they would be in violation of the international law principles applicable to mineral resource activities in Non self-governing territories" (§25).

1. Kerr-McGee website: http://www.kerr-mcgee.com

2. http://www.onhym.com

3. Note: French E &P Company TOTAL signed a similar contract in September 2001 for the "other half" of offshore WS (i.e. area of Daklha). Did not renew the licence in November 2004 officially because of "lack of oil".

4. Survey started in May 2003 and completed in January 2003. Data handed over to KMG, Total and Rabat in March 2003.

5. Contracted by KMG to carry out 2nd phase of seismic exploration in spring 2004. Survey completed in June 2004. In cooperation with UK based subsidiary Fugro SL Limited/Svitzer and Robertson Research International

6. IHS Energy report, 25 June 2004.

7. Kerr-McGee website

8. PESA April/May 2003.

9. http://www.kerr-mcgee.com/ir/governance/ir_gov_ethics.htm KMG notes that "each employee receives the code of conduct and ethics upon joining the company, and compliance is a condition of employment

10. PESA April/May 2003.

11. Upstream Online, 27 May 2002. http://groups.yahoo.com/group/Sahara-Update/message/1341

12. Afrol News, 27 May 2002.

13. Upstream Online, 29 April 2004.

14. Legal Opinion (S/2002/161).

15. UNGA resolutions 52/72 of 10/12/97; 53/61 of 03/12/98; 54/84 of 05/12/99; 55/38 of 08/12/00; 56/66 of 10/12/01.

16. E.g. Resolution 3201 (S VI) of 01/05/74 containing the "Declaration on the establishment of a new international economic order"; Resolution 3281 (XXIX) containing the Charter of Economic Rights and Duties of States.

17. Legal Opinion, paragraph 25.