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MEDIA RELEASE

LAURIE BRERETON MP SHADOW MINISTER FOR FOREIGN AFFAIRS

4/99 13 January 1999

EAST TIMOR: TIMOR GAP OIL The Shadow Minister for Foreign Affairs, Laurie Brereton, today called on the Howard Government to review the operation of the Timor Gap Treaty to ensure that Indonesia's share of oil and gas revenues from the Timor Gap are made available to East Timor and open preliminary discussions with East Timorese leaders on possible future arrangements for the Timor Gap Zone of Cooperation. "Acting Prime Minister Tim Fischer's comment on ABC Radio this morning that it was 'premature' to talk about revision of the Timor Gap Treaty confirms that the Howard Government has a long way to go before it implements any substantive change in Australia's East Timor policy", Mr Brereton said. "It's all very well to express in principle support for East Timorese self-determination, but what is required is a commitment to the real policy changes which would constitute a principled and forward-looking East Timor policy." "The Howard Government has indicated that it supports a substantial period of autonomy for East Timor prior to an act of self-determination, but has conspicuously failed to state what it considers would be an acceptable form of autonomy." "Clearly any meaningful arrangements for autonomy should allow control by the East Timorese people over their natural resources. This must include Indonesia's share under current arrangements of the oil and gas reserves of the Timor Gap." Oil production from the BHP-operated Elang, Kakatua and Kakatua North oil fields in the Timor Gap Zone of Cooperation commenced in July last year. Under the fiscal provisions of the Timor Gap Treaty revenue from current production is shared equally between Australia and Indonesia. More substantial production is expected to come on stream with development of the $1.5 billion, BHP-operated Bayu-Udan natural gas/condensate project. The Bayu-Udan project is expected to commence production in November 2002. Subject to change in the international oil prices, oil industry sources have advised that the undiscounted gross sales revenue over the life of the Timor Gap fields could be in the order of US$11 billion (current proven and probable reserves of 30 million barrels of oil, 175 million barrels of LPG, 230 million barrels of condensate and 3.4 trillion cubic feet of natural gas). Indonesia's share of potential revenue under existing arrangements is estimated to be in the vicinity of $US2.2 billion over a 25 year production period - an 'average' cash flow of nearly $US 90 million a year. "Although there are considerable uncertainties, there is little doubt that the oil and gas reserves of the Timor Gap have the capacity to generate a substantial revenue flow over the next twenty five years", Mr Brereton said. "This revenue stream could contribute very significantly to the development of East Timor and the well being of the East Timorese people. It has the potential to contribute significantly to the fiscal position of an independent East Timorese state." "If it is serious about supporting East Timorese self-determination, the Howard Government should press the Indonesian Government for Indonesia's share of oil and gas revenue from the Timor Gap to be allocated to East Timor and for an autonomous East Timorese administration to be represented on the Zone of Cooperation Joint Authority and the Ministerial Council." "Finally, as I indicated in September last year, Australia should be prepared, subject to an act of East Timorese self-determination, to conclude new arrangements so that an independent East Timor could stand in the shoes of Indonesia in respect of the Timor Gap Treaty. To this end, the Howard Government should begin preliminary discussions with East Timorese leaders including Xanana Gusmao and Jose Ramos Horta on possible future arrangements for the Zone of Cooperation."

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