The Australian July 13, 2002

Timor leaves a gap in marine demands

By Nigel Wilson

EAST Timor's decision to pursue maritime boundaries that might include substantial Australian oil and gas reserves in the Timor Sea will not derail talks aimed at defining the legal and commercial position of the Sunrise gas reservoirs.

The new country's parliament in Dili has formally approved legislation defining the parameters of its maritime zones, including an exclusive economic zone and continental shelf that may extend up to 200 nautical miles from East Timor's coast.

But whether East Timor will claim the full Sunrise reservoir containing up to 8.4 trillion cubic feet of gas or Australia's biggest producing oil field at Laminaria is not clear. No formal claim on these reserves has been made.

The Sunrise project is based on the Greater Sunrise gas/condensate fields in the Bonaparte Basin, about 400km northwest of Darwin.

It is owned by Woodside, Phillips, Shell and Osaka Gas.

Australian Government sources said yesterday they understood the East Timorese legislation did not assert East Timor's maritime zone did, in fact, extend the full 200 nautical miles.

"Rather, these are the parameters within which boundaries with East Timor's neighbours may be defined," one source said.

A spokesman for Foreign Minister Alexander Downer said the move was consistent with East Timor's previously announced positions.

"Australia acknowledges East Timor's right to seek a permanent maritime boundary delimitation with Australia, and will listen to what East Timor has to say," the spokesman said.

As Australia in March withdrew from the International Court of Justice's jurisdiction on maritime boundaries, East Timor's claim must be settled by negotiation rather than litigation.

Australia, which maintains the boundary should remain at the deepest point off the continental shelf, would lose its 79.9 per cent share of the Greater Sunrise gas field if the East Timorese proposal was accepted.

And Laminaria, which is owned 50 per cent by Woodside with Shell and BHP Billiton Petroleum each having 25 per cent, could be affected if the boundary of Joint Petroleum Development Area contained in the Timor Sea Treaty signed on May 20 was extended only 6.5km to the west.

In Darwin yesterday Northern Territory Chief Minister, Clare Martin, urged Canberra to quickly resolve the maritime boundary question.

"What oil and gas producers need is certainty, and certainly from the Australian point of view and the East Timorese point of view, it's got to be done quite quickly," she said.

In Dili next week, Australian and East Timor officials are scheduled to meet to discuss the so-called unitisation agreement for Sunrise.

The talks are aimed at providing certainty concerning the field's administration, the development plan, gas sales agreements and clarification of where production gas will be valued for taxation purposes.

Australian government and company officials say there is no evidence that East Timor will not honour their commitment to complete negotiations for the international unitisation agreement by the end of the year.

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