Subject: AU: Doubts over Timor Sea deal

Also - AFP: East Timor, Australia near final deal on multi-billion dlr energy reserves; AUSGOV: Howard weighs in; ABC AM - Timor Sea oil agreement close: Downer

The Australian

Doubts over Timor Sea deal

14may05

DOUBTS have been raised over whether Australia and East Timor have reached an agreement to carve up multi-billion dollar oil and gas reserves in the Timor Sea.

Talks have been drawn out over the past year and have stalled repeatedly over the disputed maritime boundary between Australia and its tiny neighbour.

Australia has been accused of playing hardball over the resources - worth an estimated $41 billion.

The latest round of negotiations concluded in Sydney yesterday, with Foreign Minister Alexander Downer saying they had been successful.

"We feel the discussions were very successful. There will probably be no further need for negotiations," Mr Downer told reporters.

"The conclusion that the officials reached will be taken back to ministers in both East Timor and Australia and be given consideration," he said without releasing details.

It is thought the two countries have reached a deal which will defer a decision on permanent maritime boundaries for up to a century.

In return, East Timor will get an extra two to five billion dollars from the most profitable Greater Sunrise gas field, according to some media reports today.

But the Melbourne-based Timor Sea Justice Campaign (TSJC) said Mr Downer had made positive sounds about the talks before with no real resolution.

"It's not the first time Mr Downer and his posse have claimed that all is well and settled only to discover that the East Timorese side still had issues to resolve," TSJC spokesman Dan Nicholson said.

Mr Nicholson described Australia's part in the negotiations as forcing a person dying of thirst to bargain for water.

"The Australian Government has taken full advantage of East Timor's desperation," Mr Nicholson said.

"While East Timorese children are dying of preventable diseases, the Australian Government has been taking $1 million a day in contested oil and gas royalties."

Prime Minister John Howard, speaking at the Timber Communities Australia national conference in Tasmania, dismissed the criticism.

"You can never guarantee that unreasonable criticism will stop when you have a fair outcome," he told reporters.

"All I can say is that we haven't behaved unfairly to East Timor.

"We've been very generous to East Timor and I hope the matter is fully resolved in a way that is fair and satisfactory to the both sides."

Australia and East Timor signed an interim deal in 2002 - the Timor Sea Treaty - to handle the oil and gas resources in what is known as the Joint Petroleum Development Area (JPDA).

Under the deal, East Timor receives 90 per cent of more than $10.2 billion generated from inside the area and Australia gets 10 per cent.

But the bulk of the oil and gas reserves, including the lucrative Greater Sunrise gas field worth around $9 billion, fall outside the JPDA.

-- 14 May 2005

TRANSCRIPT OF THE PRIME MINISTER THE HON JOHN HOWARD MP DOORTSTOP INTERVIEW LAUNCESTON, TASMANIA

JOURNALIST:

Prime Minister, the Timor oil treatyÖ Do you think that will go some way to stemming the criticism received around ANZAC Day?

PRIME MINISTER:

Well you can never guarantee that unreasonable criticism will stop when you have a fair outcome. All I can say is that we havenít behaved unfairly to East Timor, weíve been very generous to East Timor and I hope the matter is fully resolved in a way that is fair and satisfactory to both sides. But as to the criticism, well criticism goes on whether you have a fair outcome or not because some people make unreasonable criticism. Itís a bit like the agreement I signed yesterday; itís a fair agreement and most reasonable people support it but thereíll still some people saying itís not enough.

--

Saturday May 14, 01:32 PM

East Timor, Australia near final deal on multi-billion dlr energy reserves

SYDNEY (AFP) - Impoverished East Timor will win billions of dollars in extra revenue from an undersea oil and gas field which it shares with Australia under a detailed deal negotiated this week, news reports say.

Australian Foreign Minister Alexander Downer said after talks ended Friday in Sydney that the two countries were on the threshold of a final agreement that would allow oil and gas projects to go ahead. He gave no details.

The Australian and the Australian Financial Review said East Timor's share in the Greater Sunrise field would rise to 50 percent from 18 percent under the new deal, which follows a year of talks.

In return the new nation will agree to postpone for 50 years any final delineation of the sea boundary.

East Timor, which was Asia's poorest nation upon independence in May 2002, will get an extra two to five billion dollars (1.5-3.6 billion US) from Sunrise royalties, depending on world energy prices.

"Discussions were very successful, there will probably be no further need for negotiations," Downer said late Friday.

"The conclusion that the officials reached will be taken back to ministers in both East Timor and Australia and be given consideration.

"And assuming that the East Timor government, as well as our government, is happy with the conclusion reached at this round of negotiations, then we will be able to move towards signing an agreement," Downer said.

Australia announced last month the two sides had reached "substantial agreement on all major issues" in the acrimonious dispute, which centred on where the border should run.

Australia insisted that a 1970s sea boundary agreed with East Timor's former colonial ruler Indonesia should remain in place.

That boundary gives Canberra two-thirds of the sea area between the two nations and most of its energy resources, estimated to be worth 32 billion US dollars. East Timor wants the boundary set at the mid-point between the two countries, giving it most of the resources.

Australia withdrew from the International Court of Justice's maritime boundary dispute mechanisms in 2002. Since then religious groups, war veterans and rights groups in Australia have all pressured Canberra to give East Timor a fair deal.

East Timor already gets 90 percent of revenues from a joint development area sited between the boundary claimed by each side, but this excludes Greater Sunrise.

Oil firms had threatened to scrap Timor Sea projects unless the dispute was settled

--

Timor Sea oil agreement close: Downer

ABC AM - Saturday, 14 May , 2005 08:00:57

Reporter: Kim Landers

ELIZABETH JACKSON: There are signs of a breakthrough in the long-running dispute between Australia and East Timor over the huge oil and gas reserves in the Timor Sea.

The Foreign Minister Alexander Downer says the two countries are on the "threshold of an agreement" worth billions of dollars after another round of official talks in Sydney yesterday.

But it's not the first time the two parties are thought to have been close to an agreement.

From Canberra, Kim Landers reports.

KIM LANDERS: At stake are the oil and gas reserves in the Timor Sea worth billions of dollars.

It's meant that Australia and East Timor have been haggling over where the maritime boundary between the two countries should be drawn. A few kilometres one way or the other could make a big difference to who gets the lion's share of the valuable resources.

But now there's renewed hope a consensus has been reached.

AM understands Australia will pay East Timor up to $5 billion so the issue of a permanent maritime boundary can be shelved for the next 50 to 60 years.

Foreign Minister Alexander Downer won't confirm the details but says both sides are on the threshold of an agreement.

ALEXANDER DOWNER: There will probably be no further need for negotiations. The conclusions that the officials reached will be taken back to ministers in both East Timor and in Australia and be given consideration, and assuming the East Timor Government, as well as our Government, is happy with the conclusions reached at this round of negotiations then we'll be able to move towards signing an agreement.

I think we really are now on the threshold of an agreement, subject to there being some ministerial objection, which at this stage we can't anticipate.

KIM LANDERS: The East Timorese delegation agrees the talks have gone as far as they can at an official level and it's now up to the governments of East Timor and Australia to agree to the plan.

Dan Nicholson is from the Timor Sea Justice Campaign ≠ an Australian lobby group which believes East Timor should control all of the gas and oil fields it is entitled to under current international law.

He says talk of a consensus might be premature.

DAN NICHOLSON: We'll wait and see what's in the detail of the plan. We haven't seen everything. But certainly from what we've heard, it certainly doesn't sound like a fair deal to us.

This whole process, the negotiation process, has been very unfair. It's like asking someone dying of thirst in the desert to negotiate about a glass of water.

KIM LANDERS: So do you believe Mr Downer is being a little optimistic when he says that unless there are unforseen objections, the deal should be done?

DAN NICHOLSON: Look, Timor's in a very difficult position, they have very little money, so they're forced to get whatever they can. So we'll wait and see what happens. Mr Downer said before that a deal was almost done, and it hasn't proven to be the case, so we'll wait and see.

ELIZABETH JACKSON: Dan Nicholson from the Timor Sea Justice Campaign ending that report from Kim Landers.


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