Subject: GLW: Australia forces deferral of Timor boundary resolution

Also: Timor Sea oil - a question of sovereignty

From Green Left Weekly, May 4, 2005.

Australia forces deferral of Timor boundary resolution

Jon Lamb

Three days of negotiations over the disputed maritime boundary between East Timor and Australia concluded in Dili on April 29.

Australian foreign minister Alexander Downer announced that in exchange for East Timor’s agreement to defer the resolution of the maritime boundary, Australia has agreed to concede a percentage of revenues from the Greater Sunrise field to East Timor. What this percentage will be has not been revealed, but according to Downer, it could add a miserly $2-$5 billion to East Timor’s entitlements.

If the maritime boundary between the two countries was set according to the United Nations Convention on the Law of the Sea, most if not all of Greater Sunrise would be in East Timorese territory, entitling the cash-strapped country to an expected $40-$50 billion in government royalties.

According to the April 30 Sydney Morning Herald, East Timor agreed to defer a maritime boundary agreement for 50 to 60 years.

Public protests and lobbying in Australia and East Timor intensified during the recent negotiations, adding to the growing pressure against PM John Howard’s illegal grab for East Timor’s oil and gas reserves.

In keeping with the government line pursued since negotiations in 1999, Downer repeated the stock-standard lies that “we’ve been enormously generous to East Timor” and that East Timor would not be free “if it hadn’t been for the Howard government”.

As supporters of East Timor have correctly pointed out, the “generosity” has come from East Timor, with the Australian government acquiring royalties in excess of $2 billion (around $1 million a day) from the Laminaria-Corallina oil field since 1999. This field, which is close to being pumped dry, lies within seabed territory that rightfully belongs to East Timor.

Another brazen lie was sprouted by Downer in comments reported by ABC Online on April 26. “It’s sometimes presented to the Australian public that if we drew a median line between Australia and East Timor, East Timor would get more than they get now ­ that’s not right”, and “If you drew a median line, they may end up with a good deal less than 90% [of royalties from the JPDA ­ Joint Petroleum Development Agreement]”.

These statements are completely false and intended to sow confusion. If the median line was the location of the maritime boundary between Australia and East Timor, then East Timor would receive 100% of the oil and gas royalties in the JPDA. In addition to this, it would almost certainly receive 100% of Greater Sunrise (which overlaps the JPDA) and 100% of Laminaria-Corallina.

A statement released by the East Timor NGO Forum on April 26 called on the Australian government “to return to the international dispute resolution process for maritime boundaries of the International Court for Justice and the International Court for the Law of the Sea” and to “cease exploration of the Laminaria-Corallina and other fields in the disputed territory, including the granting of new licences”.

The statement also requested that the government of East Timor “not rush in obtaining an agreement for the exploration of Greater Sunrise; it is more important that you determine a maritime boundary and a lateral boundary based on international law”.

Further discussions between the two countries will take place in Brisbane on May 11.


From Green Left Weekly, May 4, 2005.

Timor Sea oil - a question of sovereignty

Sibylle Kaczorek

As the Australian government continues its attempted theft of Timorese oil, solidarity from Australians with the Timorese becomes more important than ever. At Easter, Tomas Freitas, a spokesperson from the East Timor Institute for Reconstruction Monitoring and Development, was a guest at the third Asia-Pacific International Solidarity Conference in Sydney. He explained the position of institute on the issue.

Freitas said that the issue of Timor Sea oil is primarily a question of sovereignty, not resources, and he argued for government transparency in all matters relating to East Timor's oil.

In 1972 Australia and Indonesia negotiated a maritime boundary determined by Australia's continental shelf, which at the time was recognised as in accordance with international practice. Portugal, then the colonial administrative power over East Timor, refused to take part in these negotiations. Subsequently, no maritime boundary between Australia and East Timor was set.

International law changed in 1982 and since then has stipulated that the maritime boundary between two countries with a distance of less than 400 nautical miles of sea between them shall be the mid-point.

In March 2002, only a two months prior to East Timor becoming formally independent, the Australian government took the extraordinary step of not recognising the jurisdiction of the International Court of Justice in determining maritime boundaries and rejected arbitration by the Hamburg-based International Tribunal for the Law of the Sea. It did so to avoid the new East Timor government taking Australia to these international arbitration agencies to determine a maritime boundary based on international law. Without Australia recognising these international jurisdictions, East Timor is unable to enforce its rights.

Freitas said: “We do not agree with Australia on the continent shelf argument because the agreement was signed in 1972 between Indonesia and Australia. Now, we are a new country. The whole world, including the UN, recognises our sovereignty. That is why we demand a fair maritime boundary between Australia and East Timor.”

Indonesia invaded East Timor in 1975 and terrorised the population. The Australian government decided that it was more advantageous to deal with Indonesia on the issue of oil and gas in the Timor Sea than an independent East Timor and thus condoned the Indonesian occupation.

Royalty income

In 1989, Australia and Indonesia negotiated the Timor Gap Treaty ­ a deal between the two countries dividing up the royalties from the Timor Sea's oil and gas within the area, which never saw a maritime boundary negotiated.

All of the royalties from the Laminaria-Corallina oil field are taken by Australia despite the fact that East Timor gained sovereignty in May 2002 and, under international law, the field is completely in East Timor's territory. This oil field will be exhausted within the next couple of years.

Production at Bayu-Undan oil field started in 2004 with a current share in royalty revenue of 90% for East Timor and 10% for Australia. The expected commercial life of this field is 15 years.

The major issue of contention relates to the Greater Sunrise gas field. As with Bayu-Undan, this field is also located within East Timor's territory, providing international law applies. The commercial life of this field is expected to be around 35 years.

When it comes to estimations of the productive value of these fields, the figures disseminated through the corporate media are substantially lower than the to-be-expected value, failing to take into account changes in demand and the price of oil and gas on the world market. Adjusted figures, for instance, estimate Greater Sunrise will produce A$52 billion rather than A$30 billion in government receipts.

Australia's current position on Greater Sunrise is a revenue split of 18% to East Timor and 82% to Australia.

According to Freitas, the East Timorese government has been pushed into a dilemma by the Australian government ­ East Timor is forced to accept a few more crumbs off the revenue table for the postponement of a settlement on maritime boundaries for up to 100 years, when all the oil and gas in the Timor Sea is likely to be have been exhausted.

Freitas explained that “East Timor's government perspective on sovereignty is about how to control the oil and gas industry, how to create jobs and how to manage the money. That's what [Prime Minister] Mari Alkatiri said to us on what he meant by sovereignty. We told him that the important thing for us is to determine our boundary rights with Australia. Once the boundary is determined it is much easier to work out issues of production and revenue of the oil and gas resources, not like now where East Timor is getting 18% of Greater Sunrise.

“Determining the maritime boundary first will give us more control. We can decide to approach another company to drill for oil and gas and look for other fields. We can also decide if we do not want to develop a particular field; for instance we might decide that we do not have enough human resources to control the development. We could save a field for another 50 years and when East Timor has more experts, we can have real control about the development and the environmental impact.”

Pipeline to Timor?

Sections of the international solidarity movement have argued for a gas pipeline to be built to East Timor rather than to Darwin. While Freitas agrees with this choice if posed in such a way, he has a different approach.

“A pipeline to Timor would risk damage to our land and sea that we are not able to deal with at this stage, like in Nigeria, where an oil pipeline caused massive destruction. The oil company was meant to repair and maintain the pipeline but it never did and the environmental consequences are massive.

“Our government says that a pipeline will create jobs for Timorese. But what jobs would Timorese be able to do? The government talks about more than 10,000 jobs, but I think these jobs will be filled with people from Australia. Our people will end up mowing their lawns, doing their house cleaning.

“We are not ready for a pipeline yet. We don't have to exploit all of the resources now, even though we are a poor country. We also need to develop other sectors of the energy industry, solar power for example.”

Freitas reported to the conference that seven East Timorese activists representing organisations focusing on environmental issues, human rights, development, labour and women's rights travelled to Nigeria to observe and learn about the effects of petroleum activities on community development.

They observed the Akassa community, where ChevronTexaco had destroyed the rural fishing industry through incessant oil pollution. The delegation also visited the Kolo Creek community, where two huge flares from Shell's pipes had ravaged the local forests, streams and farmlands.

The Nigerian visit led the delegation to conclude that East Timor must be prepared to avoid similar scenarios through having greater transparency and accountability from petroleum management, and that independent oversight mechanisms must exist.

In the days before speaking at the Sydney conference, Freitas attended a meeting in London of the Extractive Industry Transparency Initiative. Initiated by the British government in June 2003, the proclaimed aims of the EITI is to ensure that the revenues from extractive industries contribute to sustainable development and poverty reduction.

Freitas said: “I was invited by the British government, along with government and non-government representatives from other resource rich countries. The meeting was supported by all the big oil companies. One interesting thing about this meeting was that the agenda was all about transparency in the developing countries but nothing about transparency in the developed countries. The discussion was about how to create good conditions for business to explore the oil and gas in the developing countries.

“We recognise that we do not have the capacity to drill for oil and gas yet. But we know from examples around the world that oil and gas companies create disaster everywhere. Their work is never to the benefit of the people who own the oil and gas. I told the British secretary of state that for us it is not only important how to use the natural resources but also how to preserve the resources.

“One of the more important aspects of this meeting was to give our government the understanding that we are demanding full transparency about the oil and gas industry. Mari Alkatiri said that all information is published on the internet and I responded stating that this is not very meaningful with an illiteracy rate of 40% and hardly any access to the internet at all. Even among our NGOs there are only three or four who can access the internet, and that is how people are supposed to know about the industry!”

Freitas talked about the implications of a lack of transparency on revenue management. “At the moment we do not have the information on how much money has actually come from Bayu-Undan. That information is not separated out. We also do not know where the money is held ­ whether in Dili, Australia, the US or somewhere else.

“Our position is that the money should be invested in East Timor, for our future generations. This is the money of the people of East Timor, not of the Timorese government. We are not happy if the money is invested in the US banks, as this means lending the US money to buy weapons which they take to Iraq and kill innocent people.”

Freitas concluded: “Unless we can agree on a boundary with Australia, we do not know where the limits of our new country are, nor can we exploit all the resources that are rightfully ours. The future economic independence of East Timor relies on using the natural resources in an ecologically responsible and sustainable way.”

From Green Left Weekly, May 4, 2005.

Back to May menu 
World Leaders Contact List
Main Postings Menu