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PDF versionPlain facts about
Australia & East Timor’s Maritime Boundary
March 2005
After 400 years of colonization and a quarter-century of military
occupation, East Timor became independent in 2002. However, the world’s
newest nation has yet to establish boundaries with its neighbors,
Indonesia and Australia. Tens of billions of dollars worth of oil and gas
lie under the Timor Sea between East Timor and Australia (see map on next
page), and resolving that maritime boundary is essential to East Timor’s
ability to provide for its people. So far, Australia has been unwilling to
negotiate respectfully with East Timor according to international legal
principles.
Although it is a sovereign nation, East Timor has limited capability to
persuade Australia to negotiate fairly. In fact, Australian officials
often try to bully East Timorese negotiators, using their superior size,
wealth, experience and options to pressure East Timor to surrender its
legal rights. Support from officials and citizens in the United States can
make a difference, just as it did in helping to end Indonesia’s 24-year
occupation.
In response to initiatives by the
U.S. Congress and others,
the Australian government is distributing inaccurate and incomplete
information about the Timor Sea boundary dispute. ETAN is publishing this
fact sheet to help people understand the truth.
| Australia says |
But in reality |
| They are offended by criticism of Australia’s role
in East Timor. |
Although Australia did
contribute significantly to East Timor’s independence in 1999, the
international goodwill they earned is now at risk. Many East Timorese
feel that their struggle for independence is not complete without
boundaries accepted by their neighbors, and Australia’s refusal to
negotiate a fair permanent maritime boundary is seen as obstructing
that goal.
Moreover, as the Congressional letter (see page 5) sent to
Australia’s prime minister said, the billion dollars taken by
Australia since 1999 from oil fields claimed by East Timor dwarfs the
cost of Australia’s assistance to East Timor. This makes East Timor
the largest (albeit unwilling) donor of foreign aid to the Australian
treasury. Finally, the Australian government supported Indonesia from
1975 to 1998, during that country’s illegal and brutal military
occupation of East Timor. Australia gave de jure recognition to the
occupation in 1978 in order to access Timor Sea resources, the only
democratic country to do so. |
| Putting revenue from disputed areas in escrow is
ridiculous. |
On the contrary, placing the
funds in escrow is the only fair way to manage the temporary situation
until a boundary settlement is reached, and will motivate both sides
to resolve the boundary dispute expeditiously. It Australia’s
continuing unilateral issuance of licenses to petroleum companies in
these areas violates international law and has been protested by East
Timor’s government. |
| Australia has been very generous in agreeing to a
90/10 split of the JPDA in East Timor’s favor, when compared to the
50/50 split that applied under Indonesia. |
The 50/50 split divided the
spoils of illegal occupation – neither Indonesia nor Australia owned
this territory. Indonesia “gave” Australia a large share as payment
for Australia’s complicity in Indonesia’s brutal occupation.
Firstly, the new nation has no maritime boundaries, as its former
colonial power (Portugal) never negotiated any with its neighbors, nor
did the transitional UN administration. Even the agreements Indonesia
and Australia made during Indonesia’s illegal occupation of East Timor
did not establish a boundary. In any case, agreements made then are
invalid and cannot be applied to the new nation. Secondly, the
majority of what should be East Timor’s petroleum resources are
outside the JPDA, and the 90/10 split does not apply to them. These
include 80% of the Greater Sunrise field and all of the
nearly-depleted Laminaria-Corallina fields. Australia has taken
possession of the resources outside the JPDA, although both countries
claim them and they would belong to East Timor under UNCLOS
principles. |
| East Timor is making a grab for the lateral
boundaries of the JPDA. |
This is not a “grab” but a
justified claim. Although the precise location of the east and west
lateral boundaries would have to be determined by negotiations or
arbitration, current principles of international law would place them
significantly wider than the current lateral edges of the JPDA,
encompassing all of Laminaria-Corallina and most or all of Greater
Sunrise. |
| Australia’s unilateral exploitation of the
Laminaria-Corallina fields, as well as its claim to nearly all of the
Greater Sunrise field, are consistent with international law. |
Under principles of
international law widely established since the 1982 United Nations
Convention on the Law of the Sea, maritime boundaries between facing
countries should follow the median line, half-way between their
coastlines, without regard to the topography of the sea floor. Until a
boundary is established, both nations are obliged to exercise
restraint. |
| The problem in East Timor is capacity to use money
effectively, especially in the health area, not a shortage of money
from offshore oil and gas development. More money won’t improve health
in East Timor. |
Since 1999, Australia has
taken in more than a billion dollars (approximately two billion
Australian dollars) from petroleum fields outside the Joint Petroleum
Development Area but twice as close to Timor as they are to Australia,
or about one million dollars each day. East Timor has not received a
single cent from these fields. At the same time, East Timor has an
extremely meager budget – compared to Australia, East Timor’s per
capita expenditures on health care, agriculture, and education are
tiny. (See below.) According to the 2004 UNDP Human Development
Report, 126 of every 1,000 children born in East Timor die before
their fifth birthday, compared to six in Australia. In Australia,
health care professionals attend virtually every birth; in East Timor,
more than three out of four babies are born with no health care
personnel. Life expectancy is only 49 years in Timor, compared with 79
in Australia.
To argue that more funds would not enable East Timor to more
effectively address chronic food shortages and a health care crisis is
disingenuous. If East Timor had had a billion dollars more since 1999,
they could have done much to provide health care services and develop
their capacity and infrastructure. Moreover, arguing that more money
will not improve health ignores many other factors that affect public
health – better education, improved nutrition, access to medication,
clean water, sanitation, improved roads and other infrastructure,
electrification, and other areas that remain seriously underdeveloped
in East Timor due to a lack of funds. |
The Timor Sea and Contested Areas Between
Australia and East Timor
The cross-hatched area is the Joint Petroleum Development Area (JPDA),
defined by Indonesia and Australia in 1989 during the illegal Indonesian
occupation. The JPDA includes some oil and gas fields on East Timor’s side
of the median line, but less than half of the total reserves. This area
was legitimized by the interim 2002 Australia-East Timor Timor Sea Treaty,
which establishes a temporary division (90% East Timor, 10% Australia) for
revenues from the JPDA, but expires when permanent boundaries are
established.
East Timor continues to claim additional area north of the median line
which Indonesia had earlier ceded to Australia, but Australia does not
acknowledge that that area is up for discussion.
The striped areas are likely to belong to East Timor under a fair legal
settlement.
East Timor’s expenditures
and expected oil revenues
|
| East Timor’s government budget is $83 million dollars,
less than $100 for each of its 940,000 citizens. Bilateral and
multilateral aid, which will diminish sharply over the next few years,
adds $120 million, mostly for capital and infrastructure projects.
This table shows how East Timor spends this money.
By comparison, Australia’s government budget is $193 billion. With
a population of 20.2 million, Australia’s per capita government
expenditure is 108 times East Timor’s. From another perspective, ten
million dollars of additional petroleum revenue would increase East
Timor’s per capita government expenditure by 12%. The same amount
would increase Australia’s per capita government expenditure by
0.0052%, one two-thousandth as much.
The Australian brochure on maritime boundaries claims that East
Timor will earn “well in excess of US$6 billion in revenues from the
Bayu-Undan project alone”, but the East Timor government estimates the
revenues at $3.1 billion.
East Timor’s government plans to manage its petroleum income with a
Petroleum Fund, trying to avoid the “resource curse” which afflicts
many similar oil-dependent countries. According to their calculations,
Bayu-Undan will provide about $93 million per year sustainably, less
than East Timor currently receives in foreign aid. This amount would
more than triple if East Timor received its entitlement from Greater
Sunrise and other contested fields. |
 |
Background on the Timor Sea Boundary Dispute
The Timor Sea between Australia and East Timor contains significant
seabed deposits of oil and natural gas, which constitute East Timor’s
principal exportable natural resource. The 2002 interim Timor Sea Treaty
provides the basis for the development of an area in the Timor Sea known
as the Joint Petroleum Development Area (JPDA). This arrangement allows
East Timor to receive approximately 41% of the revenues in the Timor Sea
that it would be entitled to under international law. The Timor Sea Treaty
is without prejudice to a permanent boundary settlement, and will lapse
when a permanent maritime boundary is set. East Timor signed the treaty
because it desperately needs revenue from the Bayu-Undan oil and gas field
within the JPDA. Those funds are needed to fund basic services, since
there is very little other taxable economic activity.
Australia has taken possession of some 59% of the oil and gas reserves
that should legally belong to East Timor. Australia continues to extract
oil from this area, receive revenue, and sign new exploration contracts,
while stalling agreement on a permanent boundary. The single biggest
resource in the Timor Sea is the Greater Sunrise gas field (yet to be
developed). Under interim arrangements not yet ratified, Timor will
receive only 18% of upstream Sunrise revenue, and no downstream revenue.
Under international legal principles, most or all of Sunrise would be in
East Timor’s territory, and the new nation could decide how to sell and
process its oil and gas.
|
Australia should
Ö Rejoin
international dispute resolution
mechanisms for maritime boundaries.
Ö Refrain from
offering disputed areas for new petroleum exploration contracts.
Ö Place all
revenues from disputed areas in escrow until a permanent maritime
boundary is agreed.
Ö
Expeditiously negotiate a permanent maritime boundary in the Timor
Sea in good faith,
according to principles of international law
and respect for the sovereignty of both countries.
Ö Accept East Timor as an
equal partner in making revenue-sharing and development decisions
for projects in contested areas.
|
|
East Timor currently receives no revenue from oil and gas fields just
outside the JPDA (Buffalo and Laminaria-Corallina), although they are
twice as close to Timor as to Australia. Australia has taken in two
billion Australian dollars in revenue from these fields since 1999.
Because these fields lie in an area of overlapping claims, Australia’s
continued issuance of licenses to petroleum companies violates
international law. The East Timor government has asked the Australian
government to stop unilaterally exploiting these resources. A boundary
drawn according to international law would give East Timor a significantly
wider area than the JPDA, probably encompassing the entire
Laminaria-Corallina field and most or all of Greater Sunrise field.
Australia has rejected international legal processes for settling
maritime boundary disputes. Two months before East Timor’s independence,
Australia unilaterally withdrew from maritime boundary dispute resolution
mechanisms of the International Court of Justice and the International
Tribunal for the Law of the Sea. This withdrawal leaves East Timor without
legal recourse if Australia refuses to negotiate expeditiously and in good
faith, as has been the case so far.
When both sides approach negotiating a permanent maritime boundary in
good faith, an agreement usually takes only a few years to negotiate. When
Australia and Indonesia agreed on a seabed boundary in 1972, it took less
than three years to negotiate two treaties covering a much larger area
than the Australia-East Timor border. Australia and the U.S. completed
negotiations of their complex Free Trade Agreement (passed last July) in
under a year.
At the first substantive meeting between Timor and Australia in April
2004, Australia refused to discuss areas outside of the JPDA. Further
talks before and just after Australia’s October 2004 election floated the
idea of a “creative solution,” whereby East Timor would suspend its
boundary claim for decades in return for financial compensation. The
discussions collapsed when it became clear that Australia did not intend
to consider East Timor’s views about development options, and that the
financial package offered was far less than the value of the disputed
resources. Another round of talks was held in early March 2005. While the
outcome of those talks has not been made public, it is clear that
Australia still refuses to negotiate boundaries. As time elapses,
Australia’s hard-line position and East Timor’s poverty may be coercing
the new nation’s government to surrender some of its rights.
Australia claims “sole Australian seabed jurisdiction” outside the JPDA
because “Australia has exercised exclusive sovereign rights over this area
for an extended period of time.” This assertion is based on the 1989 Timor
Gap Treaty between Indonesia and Australia, which was never valid.
According to East Timorese President Xanana Gusmão, the boundary
dispute “is a question of life or death, a question of being continually
poor, continually begging, or to be self-sufficient.” Australia is
affluent, with a strong infrastructure and social system, while East Timor
is not. Maternal mortality is 83 times higher in East Timor than in
Australia. Malaria and tuberculosis are widespread. Education is
desperately needed for future development. Today, 41% of East Timor’s
people survive on less than 55 cents per day, the national poverty line.
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