Letter published in the Guardian, UK Friday, October 24 2003

Australia the oil bully

The Australian High Commissioner believes that the interim legal framework for Timor Sea petroleum development is a winner for East Timor (letters, October 20). In fact, the real winner is Australia.

Under arrangements East Timor signed on its first day of independence, Australia receives revenues from about 59% of the deposits that are closer to East Timor than to Australia. Under accepted legal principles, these deposits would belong to East Timor, but Australia responded reluctantly to requests to begin negotiations on a maritime boundary; preliminary talks begin next month, but as the Australian foreign ministry said: "We wouldn't start putting time frames on it."

If a boundary settlement is not agreed while there is still oil under the sea, Australia's withdrawal from international legal mechanisms for settling boundary disputes will leave the tiny nation without recourse. Many programmes, including some funded by Australia, teach East Timor about the rule of law. But the lesson of Australia's position is that if the booty is rich enough, law is irrelevant. It prefers to bully a country that needs oil to fund basic health care and education.

Australia claims to be a major benefactor of East Timor, but its assistance pales in comparison with the tens of billions of dollars it will reap from East Timor's resources under current arrangements. In fact, Australia has taken in more (over $1.2 bn) from the Laminaria oilfield than it has given East Timor in aid. This field began production in 1999 while the smoke was still rising from East Timor, but more than 70% of its oil has already been extracted and sold.

Jesuina Cabral Charles Scheiner Institute for Reconstruction Monitoring, Dili, East Timor

Oil deal is a winner for East Timor

Monday October 20, 2003 The Guardian

A legal framework for developing the petroleum deposits in the Timor Sea for the benefit of Australia and East Timor is already complete (Anger in East Timor as Australia plays tough over gas reserves, October 14). The Timor Sea treaty and Sunrise unitisation agreement are a win-win package for both countries and a fair basis for developing resources for mutual benefit and underpinning East Timor's economic viability. The treaty gives East Timor 90% of production from the Joint Petroleum Development Area. This is generous compared with the 50:50 split in the former treaty with Indonesia, especially given that Australia maintains its long-standing claim to the entire continental shelf off Australia.

The revenues East Timor will receive as a result of this distribution will be a major contribution to creating a sound economic base and long-term stability. Development of the oil and gas resources, including the major Bayu-Undan field, is proceeding and revenue has already started flowing.

The treaty contemplates unitising the Sunrise deposit on the basis that 20.1% of the resource lies within the JPDA and 79.9% is attributed to Australia. The unitisation agreement confirms that distribution. Neither instrument prejudices future maritime boundaries between Australia and East Timor.

Australia's removal of maritime boundary disputes from compulsory dispute settlement reflects our view that such disputes are best settled by negotiation, not litigation. We are looking at engaging with East Timor on these issues soon. The purpose of the treaty is to enable the development of the resources of the JPDA, notwithstanding the competing claims. Both sides understand this and the importance of not letting the issue of permanent delimitation generate uncertainty, and potentially delay, or even lead to the cessation of oil and gas production.

Australia has been in the front line of support for East Timor's transition to independence. It remains a lead donor and is among the largest contributors of personnel - military, police and civil administrators - to the UN mission. We remain committed to continuing to assist the new nation's development.

Michael L'Estrange Australian High Commissioner

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