AUSTRALIA: Hopes Rise for New Oil Revenue Deal with East Timor

Bob Burton

CANBERRA, Sep 24 (IPS) - Hopes are rising that the Australian government is finally prepared to offer East Timor a much greater share of royalties from oil and gas deposits that straddle the hotly contested maritime boundary between the two countries.

At the conclusion of three days of talks this week, just after the fifth anniversary of the U.N.-sponsored multinational peacekeeping force (INTERFET) landed in East Timor, additional discussions were announced for next Wednesday in the Northern Australian capital of Darwin.

Five years ago, the population of East Timor voted in a U.N.- organised ballot for independence from Indonesia. In the run-up to the ballot and immediately afterwards, the Indonesian security forces and Indonesia-backed militia groups opposed to independence embarked on a campaign of murder, destruction and intimidation.

Around 1,400 people were killed; an unknown number tortured, and women were raped and subjected to other forms of sexual violence.

On Sep. 20, 1999, the Australian-led international peacekeeping force arrived in East Timor's capital Dili after a United Nations Security Council resolution was passed urging global intervention.

While the Australian and East Timorese governments are being tight-lipped over the oil and gas talks, spokesman for the Timor Sea Justice Campaign, Dan Nicholson, welcomed the additional dialogue.

''It seems that the Australian government is finally willing to seriously negotiate on the issues but it is hard to see that they can go far until after the Oct. 9 election,'' Nicholson told IPS.

Australia goes to the polls on Oct. 9 and a Newspoll survey published in 'The Australian' newspaper last week showed voters were feeling more comfortable with the opposition Labor Party.

An Australian government spokesperson described the talks between government officials as "productive" but that no policy decisions would be made until after the election.

This week's talks came after months of criticism by the European Union, United States and Australian parliamentarians and numerous community groups that the Australian government would unfairly hoard most of the oil and gas revenues.

The July policy announcement by Labor Party leader, Mark Latham, committing Australia to renegotiate the sea boundary with East Timor - should the opposition get into power after Oct. 9 -- prompted a furious reaction from the Australian government.

After Latham's announcement, Australia's Foreign Affairs Minister Alexander Downer did a U-turn and at a joint media conference with his East Timorese counterpart, Jose Ramos- Horta, announced that they hoped to conclude an agreement by the end of the year.

''Fundamentally, there is good political will, determination on the two sides to work constructively, creatively, pragmatically, to bring benefits to the two countries,'' Ramos-Horta told reporters.

His comments were in stark contrast to the street protests against Australia before the last round of talks in April, where East Timor's Prime Minister Mari Alkatiri angrily denounced the unfair division of royalties as condemning East Timor to poverty and poor health standards. ''It is quite literally a matter of life and death,'' he said.

For East Timor, a fair division of the revenues is crucial to weaning itself off dependence on foreign aid and ensuring funding for reconstruction after the Indonesian military and its proxies looted and destroyed most of the countries basic services and infrastructure.

The United Nations Development Program (UNDP) in its latest assessment indicates the newly-independent East Timor will be one of the poorest countries in the world falling behind Bangladesh and Nepal. According to UNDP, youth unemployment in East Timor is at a staggering 75 per cent.

Until August's joint announcement by Downer and Ramos- Horta, Australia had insisted on honouring the boundary line negotiated with Indonesia. This boundary resulted in Australian gaining bulk of the area but established a Joint Petroleum Development Area (JPDA) over much of the most prospective oil areas with revenues to be shared between the two countries.

Within this area East Timor gains 90 percent of the royalties, such as from the small Bayu-Undan oil and gas project which is currently being exploited. However, the entire Laminaria- Corallina field and the bulk of the Greater Sunrise deposit lies on Australia's side of the current boundary.

But if the maritime boundary were drawn as a mid-point between the two countries - as is current international standard - all the royalties from the Laminaria-Corallina and approximately 80 percent of the Greater Sunrise deposit would go to East Timor.

The financial difference for the regions poorest country is massive. Under current arrangements East Timor is projected to earn four billion U.S. dollars while a mid-point boundary would triple that amount.

East Timor's biggest bargaining chip is its current refusal to pass legislation approving the Greater Sunrise project, a consortium of global oil and gas companies including Woodside, ConocoPhillips, Shell and Osaka Gas, until the issue of the maritime boundary between the two countries has been settled.

In early March 2004 the Australian government rushed legislation through parliament to ratify an agreement with East Timor over the proposed Greater Sunrise oil and gas project, estimated to be worth 35 billion dollars. The deposit lies 400 kilometers northwest of Darwin, but only 150 kilometers south of East Timor.

The legislation, titled the Greater Sunrise Unitisation Agreement Implementation Act 2004, divides the revenues with 82 percent of the projected seven billion dollars in royalties for the Australian government but only 18 percent for East Timor based on the sea boundaries Australia negotiated with Indonesia.

While Nicholson would like to think that the publicity demanding economic justice for the East Timorese forced Downer's change of heart, he suspects the main reason is a fear that the Sunrise project will be delayed for a decade or more.

"Australia wants to get Sunrise ratified in the Timorese parliament by the start of next year but that is not going to happen except at the end of the resolution of the boundary issue from the Timorese point of view,'' he said. ''So they are going to have to settle everything by then, which is really unlikely unless there is a really good offer on the table from Australia.'' (END/2004)

* Timor Sea Justice Campaign