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    Southeast Asia
     May 17, 2005
Australia, East Timor strike oil, gas deal
By Bob Burton

CANBERRA - After eighteen months of often tense discussions, officials from the governments of Australia and East Timor reached an agreement last week on the division of revenues from oil and gas deposits in the mineral-rich waters between the two countries.

While government officials are being tight-lipped about the agreement, the government of East Timor is expected to decide this week on whether it will accept the proposal. Details of the agreement are only expected to be made public after it has been officially signed by the respective governments, possibly in June. "Significant progress has been made in the discussions, but there are still some issues that need to be worked through," a spokesman for East Timor stated.

While details of the agreement are sketchy, campaigners supporting East Timor's original bid for the adoption of a boundary halfway between the two countries, which is the international norm, fear that the final deal will fall well short of what Asia's poorest nation is legally entitled to.

The Timor Sea Justice Campaign, which has spearheaded a high-profile community campaign pressing the Australian government to adopt a just settlement, wants to see the details of the agreement. "We'll be surprised if it is a fair deal for East Timor," campaign spokesman Chip Henriss-Anderssen told Inter Press Service.

After the conclusion of a previous round of talks in April, Australian officials told journalists that East Timor had dropped its insistence on the adoption of a maritime boundary halfway between the two countries. Instead, they said, it agreed to defer the settlement of the boundary for approximately 50 years in return for up to US$3.8 billion in royalties in addition to the revenue from the joint petroleum development area (JPDA). The boundaries of the JPDA were negotiated in 1989 between Australia and then Indonesian president General Suharto.

East Timor is also believed to have insisted on commitments that future oil and gas projects, such as Woodside Petroleum's Greater Sunrise project, will source at least some support services from the country.

The Australian government has been under increasing pressure lately due to a series of hard-hitting television advertisements accusing Canberra of bullying East Timor into surrendering what it was legally entitled to under international law. Over the last six months Australian businessman Ian Melrose has spent approximately A$2.2 million (US$1.67 million) on the advertisements.

While the oil and gas deposits between the two countries are two of the few natural resources East Timor stands to benefit from, they have already been costly.

In August 1975, three months prior to the Indonesian invasion of East Timor (then a Portuguese colony), the Australian ambassador to Indonesia, Richard Woolcott, sent a cable to Canberra urging compliance with Indonesia's plans to annex the island territory.

"It would seem to me that this department [of minerals and energy] might well have an interest in closing the present gap in the agreed sea border and this could be much more readily negotiated with Indonesia than with Portugal; or independent Portuguese Timor. I know I am recommending a pragmatic rather than a principled stand, but that is what national interest and foreign policy is all about ...," Woolcott wrote.

Australia subsequently acquiesced to Indonesia's invasion and became the only country to officially recognize Indonesia's annexation. Nor would Canberra speak out during the brutal 24-year long military occupation that is estimated to have resulted in the deaths of more than 200,000 East Timorese.

Since East Timor won its independence in 2002, Australia has opposed any change to the boundary it negotiated with the former Indonesian government. Under current boundaries the entire Laminaria-Corallina field and the bulk of the massive Greater Sunrise deposit lies in Australia's territory. Within its area East Timor gains 90% of the royalties from oil and gas projects, such as the small Bayu-Undan project. However, the adoption of a mid-point boundary would result in a tripling of the revenues flowing to East Timor.

Pleas from the government of East Timor that the boundary dispute be arbitrated by the International Court of Justice (ICJ) have been repeatedly dismissed by Australia. In March 2002, just two months before East Timor gained its independence, Australia withdrew from the ICJ section that deals with maritime boundary disputes.

Earlier this year the proponents of the Greater Sunrise project, a consortium of global oil and gas companies including Woodside, ConocoPhillips, Shell and Osaka Gas, put the project on hold after East Timor's parliament refused to pass legislation supporting the project until the the sea boundary dispute with Australia was resolved.

The Timor Sea Justice Coalition estimates that a mid-point boundary would see East Timor gain more than US$40 billion of gas and oil royalties. However, without an international forum to press its case and facing critical financial pressures, the East Timorese government has opted to settle quickly.

The final resolution of the agreement may still be at least several months away, with both countries requiring cabinet and parliamentary deliberations on the final agreement. Even if the agreement gains support from East Timor's cabinet it may encounter opposition within parliament.

"If the rumored details of the agreement are right, that would represent a severe short-changing of what East Timor is entitled to," said Henriss-Anderssen.

That is an assessment shared by the US intelligence and lobbying company Stratfor, which bluntly described the foreshadowed settlement as a win for the Australian government's stalling strategy. "As Stratfor forecast, the Australians would be able to wait for the cash-strapped Timorese to accept a settlement," the company wrote in the preamble to a May 2 situation analysis report.

According to a United Nations report, close to half the population of East Timor lives on 55 US cents a day - and there are times when parts of the country have nothing to eat, especially during drought. As the country struggles, its population of 900,000 is exploding with one of the world's highest birth rates, 3% or possibly 4% a year, dragging down efforts toward economic growth.

(Inter Press Service)

Canberra bullies Timor over sea boundaries
(Mar 17, '05)

Tussle over Timor Sea oil, gas resumes
(Mar 8, '05)


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