In November, 2001 the government of Morocco granted two oil companies reconnaissance licenses to evaluate the potential for hydrocarbons in the offshore areas of Boujdour and Dakhla in the Non-Self-Governing Territory of Western Sahara. These licenses contain provisions for collection and analysis of seismic data as a means to make preliminary evaluations of the geology of the areas.
The United Nations Security Council has considered and published an opinion on the issues surrounding the license contracts held by the oil companies. In a letter dated January 29, 2002, the Under-Secretary-General for Legal Affairs, the Legal Counsel to the President of the Security Council, stated that the contracts were legal. The letter clarified that in the present case, the contracts for oil reconnaissance and evaluation do not entail exploitation or the physical removal of the mineral resources. The letter also states that if further exploration and exploitation activities were to proceed, they would have to be in the interests and wishes of the people of Western Sahara. The full text of this letter can be viewed at: http://www.arso.org/UNlegaladv.htm
Following the published opinion by the United Nations, the two oil companies initiated a competitive bid process for contracts to perform the physical collection of the seismic data. TGS-NOPEC participated in this bid process, and was subsequently selected from a group of several bidding seismic companies to perform the work. Upon award of the bid TGS-NOPEC commenced acquisition of seismic data in May of 2002. TGS-NOPEC disclosed its involvement in these projects with press releases in May and June of 2002, as well as in statements from the Chairman at its Annual General Shareholders Meeting in Oslo on June 11, 2002.
As of today, TGS-NOPEC's field operations are approximately 90% complete. The Company is contractually bound to its customers to complete this work and fully intends to fulfill its contractual obligations. TGS-NOPEC has no agreement to participate in, or profit from, any future exploratory drilling or any production or exploitation of mineral resources of the area.
The Board of TGS-NOPEC believes that the Company has operated responsibly and ethically on this matter, within the realm of international law and according to United Nations guidance.
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