ET Wants A Mediator in Oil and Gas Dispute

CANBERRA, Dec. 3, 2004 (IPS/GIN) -- In a bid to revive collapsed negotiations to resolve a sea boundary with Australia, East Timor's Foreign Minister Jose Ramos-Horta wants Canberra to agree to international mediation over the division of wealth from oil and gas deposits between the two countries.

Ramos-Horta, who was expected to raise the issue with Australia's Foreign Minister Alexander Downer at a meeting later this week, is furious with what he sees as the Australian government's back-tracking on an offer it made before Australia's Oct. 9 general election.

Earlier this week Ramos-Horta launched a scathing attack on Australia's negotiations in a speech at a Sydney think-tank, the Lowy Institute.

The East Timor foreign minister revealed that a Department of Foreign Affairs and Trade official told East Timor in late October that an offer of "three billion U.S. dollars compensation spread over 30 years" was a "take it or leave it" offer, in order for the country to agree to the sea border that Australia wants.

"This figure was much less than a $4.5 billion compensation figure offered by the Australian side during talks (earlier this year) in Darwin (in Australia's Northern Territory)," Ramos-Horta said.

For 25 years, East Timor was occupied by Indonesia. The Timorese, in a United Nations-sponsored referendum, opted for independence in late August 1999. But when the ballot results were announced in September 1999, Indonesian military-sponsored militias went on an orgy of terror and razed the capital Dili to the ground.

East Timor gained independence in May 2002 after a two-year interim administration led by the United Nations. But nearly two years after independence, the country is one of the world's poorest nations.

In March, the Australian parliament passed laws giving effect to an agreement between Australia and East Timor to develop oil and gas resources expected to generate revenues of seven billion U.S. dollars.

East Timor is not happy with the deal because it will receive only 18 percent of revenue, even though the oil and gas are far closer to the shores of East Timor than they are to Australia.

On Independence Day on May 20, 2002, Dili and Canberra signed the Timor Sea Treaty. This treaty gives East Timor 90 percent of revenues from inside the so-called Joint Petroleum Development Area (JPDA) between the two countries.

The Timor Sea Treaty would allow for the production of the Bayu Undan area, within the JPDA, to begin with. Ninety percent of the government share of revenue would go to East Timor, which needs urgent funds to jumpstart its beleaguered economy.

But months later, Australia refused to ratify the treaty unless East Timor signed another resource-sharing agreement, the Greater Sunrise Unitisation Agreement. This is an interim arrangement between East Timor and Australia to put in place a legal regime necessary for the Bayu Undan project to progress while maritime boundaries are finalised.

In March 2003, Australia and East Timor signed the Greater Sunrise Unitisation Agreement, which was ratified last month by the Australian parliament. Dili says it signed this to get movement on the Bayu Undan accord.

Greater Sunrise lies about 450 kilometres north-west of the Australian city of Darwin and 150 kilometres south of East Timor. It contains an estimated 235 billion cubic metres of gas and 300 million barrels of condensate.

If the maritime boundary were drawn as a mid-point between the two countries - as is current international standard - approximately 80 percent of the Greater Sunrise deposit would go to East Timor. And the financial difference for the region's poorest country is massive. A mid-point boundary would triple the amount East Timor would earn from oil and gas resources in the Timor Sea.

While the talks collapsed over the financial offer, Ramos-Horta revealed that there was very little trust with the Australian government's negotiators.

The East Timorese foreign minister said he was "thoroughly disillusioned" with the negotiations and did not believe the countries could come to a resolution without outside mediation or a hearing in the International Court of Justice.

He said if the dispute was not resolved, it would "soil Australia's international image and would do irreparable damage to Australia-East Timor relations".

But Downer has dismissed East Timor's proposal to seek a non-binding opinion from the International Court of Justice. "We will be able to negotiate an agreement with East Timor," he insisted.

While East Timor would be happy to have the issue dealt with by the International Court of Justice, in March 2002 Australia withdrew from the section that deals with maritime boundary disputes, just two months before the then East Timor gained its independence.

Spokesperson for the Timor Sea Justice Campaign, Dan Nicholson, believes that Australia's intransigence reflects its belief that with the election out of the way it doesn't have to worry about public opinion.

"It appears now that the Australian government were just interested in getting the issue out of the headlines for the duration of the election campaign and have simply reverted to their earlier position of making a grab for the bulk of the wealth that really belongs to East Timor," he told IPS.

"I don't think this issues is going to be resolved in a hurry. We are gearing up for what will be a long campaign to ensure East Timor is treated justly," he said.

In August Downer indicated in that he was determined to resolve the boundary issue by Christmas in order to facilitate the proposed Greater Sunrise oil and gas project, estimated to be worth $35 billion.

The proponents of the Greater Sunrise project, a consortium of global oil and gas companies including Woodside, ConocoPhillips, Shell and Osaka Gas, have stated that they needed a resolution to the maritime boundary issue by the end of the year.

However, Ramos-Horta insists East Timor is in no hurry to pass legislation ratifying an agreement over the revenues from the project.

"We are poor and are in no hurry to become rich. We can wait. We are a patient proud people," he said. "We are not impressed by pressure or bullying tactics. We have self- respect and a sense of dignity ... In my many trips across this great land, I have come across thousands of generous, loving people. We know they will be with us for a long time to come."

The president of East Timor, Xanana Gusmao, has accused Australia of robbing his tiny country of hundreds of millions of dollars a year in potential oil and gas revenues.

Mr Gusmao decried the Australian government's approach to negotiations to secure a maritime boundary and the division of undersea riches between the two states.

"The Australian government has behaved very unfairly to us," Mr Gusmao told the Foreign Correspondents' Club of Thailand. "We fought for 24 years; many countries said it was a dream."

Mr Gusmao, who led armed opposition to Indonesian occupation and spent seven years in a Jakarta jail, criticised comments by the Australian foreign minister, Alexander Downer, suggesting that East Timor should feel grateful to Australia for its leadership of UN armed intervention in the territory in 1999, which helped free it from Indonesian occupation.

"OK, 1999, thank you very much," Mr Gusmao said. "But if Australia thinks all our suffering during the war is over with champagne ... we say no, don't hide the past."

He said East Timor was losing $365m (£188m) a year from oilfields over which Australia claims jurisdiction.

He added: "We feel offended when Mr Downer says Australia is generous. When the Australian government gives us $20m for education, we say, you are taking our money!"

Negotiations over the wealth under the Timor Sea broke down in October. Australia refuses to accept international mediation in the dispute, although East Timor hopes to bring the issue before the United Nations.

The dispute centres on where to draw the boundary between the two countries. Australia wants the line to follow its extensive continental shelf, which would bring Australian control to within 90 miles of East Timor's coast.

East Timor argues that maritime law requires the line to be drawn midway between the two states.

East Timor achieved full independence in 2002 but remains one of the poorest countries in the world.

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