Received from Joyo Indonesia News

Australian Financial Review September 2, 2002

Comment

Timor Sea oil is passport from poverty

By Mari Alkatiri [Prime Minister of East Timor]

It is a truism of the developing world that the blessing of petroleum wealth can be a curse. Nigeria, Papua New Guinea, Venezuela and many other countries have learnt this the hard way.

The equitable, sustainable and transparent management of petroleum revenues is a heavy responsibility. East Timor is one country that might soon enjoy this mixed blessing - the Timor Sea is rich in natural gas.

East Timor is soon set to gain petroleum revenues that can deliver the country from a poverty unimaginable to most Australians. Yet it is the Australian Parliament that will choose whether East Timor will be given this responsibility - or whether East Timor will, yet again, have to wait for true independence.

On May 20 this year, the day the world recognised East Timor's hard-fought struggle for self-determination, the prime ministers of Australia and East Timor signed the Timor Sea Treaty in Dili.

That treaty is now before the Australian Parliament for its formal ratification, hopefully by the end of September.

Much has been said over the past months about the Timor Sea, but one thing is sure: the East Timorese people desperately need the revenues that will flow soon after Parliament approves of the treaty.

Forty-one per cent of East Timorese live on less than one Australian dollar a day. Illiteracy is widespread, life expectancy is low, infant mortality rates are unacceptably high.

Diseases eradicated from or greatly reduced in Australia generations ago - tuberculosis and dengue fever, for example - are widespread killers.

But from 2004, when the first major royalty cheques come to East Timor from treaty investment, new hospitals, schools and infrastructure can be built; water supply and sanitation can be improved; and Timorese children can have a future of opportunity, not deprivation.

Projected annual revenues to East Timor from just one of the gas fields in the treaty area, Bayu-Undan, start at $US70 million ($127 million) in 2004, peaking at $US300 million in 2013 and continuing until 2020. As far as oil-producing nations go, these figures look fairly modest - until you realise that right now, in 2002, East Timor's entire annual budget is just $US77million - $US30million of which represents aid from donors.

In short, well-managed petroleum revenues will be East Timor's lucky break - but a lucky break which, after decades of suffering at the hands of others, could hardly be more deserved.

The Timor Sea Treaty, which gives East Timor 90 per cent of petroleum revenues from one part of the Timor Sea, has its critics. Some say it is too generous to East Timor, and that East Timor should be entitled to only 50 per cent of revenues.

Others say that it is not generous at all, because Australia is exploiting other parts of the Timor Sea to which East Timor has a claim under international law.

Like all negotiated texts, the treaty represents a number of compromises. Neither side is entirely happy, but both sides are satisfied.

And the investors are also satisfied. A fact that seems to get lost among the rarefied legal debates is that without the treaty, the petroleum companies, which are only just beginning to commit to investment in the Timor Sea, would go elsewhere.

If the Australian Parliament does not approve the treaty, there will be nothing happening in the Timor Sea - just some competing claims under international law and a whole lot of uncertainty.

In a fickle and oversupplied world gas market, that uncertainty might deter investment for decades to come, perhaps forever.

If investors are turned away from the Timor Sea, revenues to Australia will certainly diminish; but tiny, poor East Timor will have lost perhaps its most promising chance to wean itself off donor assistance.

The treaty, although a temporary arrangement, will jump-start petroleum investment and give East Timor and Australia the time they need to determine permanent boundaries.

On behalf of the elected Government of East Timor, I signed the treaty on May 20 because it represents the best deal for my people. It delivers important revenues in the near term without inhibiting our maritime boundary claims.

This means that when East Timor and Australia sit down at the negotiating table to work out permanent maritime boundaries - a process to which both countries are committed, and which we expect will begin in the coming months - East Timor will start with a clean slate.

On that clean slate the East Timorese people can begin to write the story of their future - a future not just of political freedom, but of true well-being, true friendship with Australia and the responsibility of true economic independence.

Mari Alkatiri is the Prime Minister of East Timor.

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