Sydney Morning Herald October 17, 2000

Timor's oil and gas share 'must be seen to be fair'

By DAVID LAGUE

The United Nations is determined to enforce what it believes is East Timor's legal right to 90 per cent of Timor Sea oil and gas revenues, potentially worth billions of dollars and now shared evenly with Australia.

Australia and the UN Transitional Authority in East Timor (UNTAET) last week completed the first round of negotiations for a treaty intended to replace the controversial Timor Gap treaty signed with Indonesia in 1989.

Australian officials have refused to discuss the substance of the negotiations or the Howard Government's desired share of income from the Timor Sea oil and gas deposits after impoverished East Timor becomes independent next year.

However, a member of the Cabinet of East Timor's transitional government and former United States diplomat, Mr Peter Galbraith, said yesterday that an independent East Timor would have a "sovereign right" to a continental shelf that extended to a mid-point between the two countries.

"East Timor has clear entitlements under international law and I doubt the East Timorese are likely to accept something less than they are entitled to," he said.

"To be honest, the United Nations could not reconcile and I personally could not reconcile accepting something the East Timorese could not accept, something that was not comparable to that which they are entitled."

Legal and petroleum industry authorities believe that if East Timor's economic zone extended to a mid-point between the two countries, the new nation could claim at least 90 per cent of the Timor Sea's known oil and gas deposits.

They also believe that the International Court of Justice would uphold East Timor's claim if the two sides failed to reach agreement.

There are projections from oil industry experts that government revenues for oil alone from the Bayu-Undan field in the zone now shared with Australia could reach more than $5 billion over 24 years if this went ahead.

A consortium headed by Phillips Petroleum late last year announced that it would go ahead with initial development of the field.

Some observers believe the Howard Government is attempting to conceal its bid to minimise East Timor's share of Timor Sea mineral wealth because it would be unpopular domestically where there is strong support for the long suffering East Timorese. It could also damage Australia's international reputation as the saviour of East Timor.

A spokesman for the Minister for Foreign Affairs, Mr Downer, was unable yesterday to comment on the outcome of the first round of talks.

He said it was necessary to conclude a new agreement to avoid a "legal vacuum" when East Timor became independent.

Diplomatic analysts believe Australia managed to extract the favourable agreement from Indonesia to share the spoils of the Timor Sea as a form of compensation for recognising Jakarta's 25 years of often bloody rule over East Timor.

Mr Galbraith, who took part in last week's talks, said there was no lawful treaty now covering the Timor Sea.

"Indonesia had no legal authority to contract for East Timor," he said.

"The UN is seeking an arrangement that gives East Timor what is East Timor's legal right or its equivalent under international law."

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