Subject: AU: Canberra agrees to E Timor boundary talks

The Australian

Canberra agrees to E Timor boundary talks

By Nigel Wilson, National energy writer


AUSTRALIA has agreed to begin talks with East Timor before the end of the year on changing the maritime boundaries between the two countries.

The promise, which follows months of delay in Canberra, comes as the Indonesian Government is under pressure to renegotiate a 1973 treaty with Australia covering the uninhabited Ashmore Reef and Cartier Island off far-north Western Australia.

Both moves threaten future Australian-based oil and gas developments in the Timor Sea and could accelerate the decline of Australia's biggest producing oilfield at Laminaria/Corallina.

Prime Minister John Howard wrote to his East Timor counterpart Mari Alkatiri on August 1 saying Australia would agree to the maritime boundary talks beginning before the end of the year.

This was nearly five months after Dr Alkatiri asked Australia to give some sort of timetable for the maritime boundary talks.

East Timor wants the boundary changed so that it runs along the median line, equidistant between the two countries, rather than the present arrangement which gives greater weight to Australia's claimed economic zone.

If East Timor were to succeed, it would secure administrative control over developments such as ConocoPhillips' multi-billion-dollar Bayu Undan project and the planned Greater Sunrise gas development.

Any change in the maritime boundaries could also hand control of the flagging Laminari/Corallina field to either East Timor or Indonesia, forcing the Australian Government to surrender potentially billions of dollars in tax and royalties, some backdated.

An adviser to Dr Alkatiri, Alisa Newman Hood, said in Dili that Mr Howard's letter was a positive development. But she noted the Prime Minister had not specified any time frame for the negotiations to conclude even though Dr Alkatiri had publicly stated that the boundary question, while complex, needed to be resolved within three to five years.

Provision for maritime boundary changes is contained in the Timor Sea Treaty signed in Dili in May last year when East Timor became a sovereign nation. But Australia's Department of Foreign Affairs and Trade has been reluctant to enter into negotiation. It withdrew Australia from the maritime jurisdiction of the International Court of Justice before the Timor Sea Treaty was signed.

Meanwhile, the small Indonesian province of East Nusa Tenggara has demanded that Australia reopen discussion on the Timor Gap and the ownership of Ashmore Reef and Cartier Island.

Earlier this month, The Jakarta Post quoted Ferdi Tanone, head of a special working committee, as saying that if Australia did not cede Ashmore Reef, known as Pasir Island to Indonesians, then Australia should pay compensation of $US25 million ($38 million) for 50 years.

Australian National University Asian and Pacific Studies Research Centre director James Fox said that depending on how boundaries were calculated, natural resources would change hands if the claims were successful. But he noted there was no evidence in recent years that boundaries had changed anywhere in the world under agreed negotiation procedures.


Received from Joyo Indonesia News

Dow Joines Newswires August 11, 2003

Australia, E Timor To Start Boundary Talks Before Yr-End

MELBOURNE -- Australia and East Timor are set to start talks before the end of the year aimed at agreeing a maritime boundary that would finally settle the ownership of billions of dollars worth of gas reserves that lie below the Timor Sea.

But a date hasn't been set for the talks nor a timeframe, despite East Timor Prime Minister Mari Alkatiri urging for the boundary dispute to be settled within the next three-to-five years.

The problem for Alkatiri is that Australia has little incentive to hurry the talks. Any compromise agreement could involve Australia having to peg back its maritime boundary, potentially giving up some lucrative royalties.

Indeed, it took Australian Prime Minister John Howard almost five months to reply to Alkatiri's call for a timeframe, and then he only agreed for talks to start before the end of year.

"These are complex issues and generally take a reasonable period to sort out," a spokesman for Australian Foreign Minister Alexander Downer told Dow Jones Newswires.

East Timor welcomed the move but will now try to pin Australia down on a date.

"It is certainly a positive but the discussions haven't yet begun," a spokeswoman for Alkatiri's Office, Zoe Cottew, told Dow Jones Newswires.

"We'll respond shortly to propose a date in the very near future," she said.

Last year East Timor, fresh from winning independence from Indonesia, claimed a maritime boundary extending 200 nautical miles from its coast, overlapping Australia's own claimed boundary and putting in doubt the ownership of the Timor Sea's vast gas reserves.

While the two countries have agreed a treaty to carve up an area of the Timor Sea and provide fiscal certainty to developers, the deal is only an interim arrangement pending a fixed boundary.

That treaty favored East Timor with Australia agreeing that the impoverished country should take a 90% share of the so-called Joint Petroleum Development Area.

The JPDA had replaced a similar agreement between Australia and Indonesia under which the area was split 50%-50%. But other major gas reserves lie outside the JPDA in waters long claimed by Australia, and they are now subject to East Timor's boundary claim.

-By Andrew Trounson, Dow Jones Newswires; 61-3-9614-2664;

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