Anyone watching unfolding developments in the Timor Gap oil and gas matters could be excused for feeling a bit confused at present. It is widely recognised that this area is crucial for East Timor’s future - as it is the most significant source of revenue for Timor’s fledgling government. Into an already confusing mix has been added the recent claim of PetroTimor which is mainly owned by Oceanic Exploration. This is a small (in relative terms) US oil firm that had been given an exploration lease by Portugal in the early 70’s - over an area that includes important sections of what is now ‘Zone A’ - the important ‘mid-section’ in the Timor Gap Treaty. Australia and Indonesia concluded the infamous Timor Gap Treaty after the invasion and occupation of Timor - and dismissed the validity of any prior permits granted under Portuguese sovereignty. Now one of the chickens has come home and is trying to roost.
Oceanic Exploration is claiming that its permit granted under Portugal remains valid. This could screw up negotiations occurring between the UN/Timorese leadership and the Australian Govt. Big stakeholders like Phillips Petroleum want the legal and political issues resolved to go ahead with major infrastructure developments.This appears to be something ‘out of left field’ that has caught all parties to the current negotiations off guard. How will it be resolved? It could be very time consuming and problematic if this trigger litigation in the Australian/Portuguese courts or the International Court. Oceanic Exploration is a small company and may be willing to accept ‘compensation’ in exchange for not derailing the major negotiations under way. Time will tell.
Meanwhile the UN/Timorese and Australian Govts were supposed to be very close to an agreement to maintain existing boundaries in the Timor Gap. One sticking point was the percentage of revenue that East Timor would receive. Australia had got as far as offering 85% of revenue from the ‘Gap’, but the UN/Timorese were expecting 90%. Before you fall about in amazement at the apparent ‘generosity’ of the Australian Govt., remember that the Timorese would be entitled under international law to demand a fixed midline boundary between the coastlines and thus would probably get nearly 100% of the revenue. Furthermore (and much more worrying for Australia) as the Timorese would then have full sovereignty over the resources, they could well demand that development of all infrastructure take place in East Timor (technically more difficult but not impossible). This would have further huge benefits to a Timorese economy with much needed investment, jobs and economic activity. The Northern Territory government has been banking on these massive infrastructure developments (worth billions) to occur near Darwin - and create a developmental windfall for the NT and Australia. Thus the angry and obnoxious comments by Dennis Burke (the Chief Minister of the NT) about the Timorese and the chief UN Negotiator - Peter Galbraith (son of the famous economist).
So the Howard government is not showing some hitherto unimagined decency and compassion towards East Timor. They are only offering this higher proportion of revenue to avoid something much less favourable to Australia - a midline agreement, which could entail major Australian losses in ‘downstream’ developments. Another potential pitfall the Australian government wants to avoid is a midline agreement with East Timor creating a precedent that could somehow be used by Indonesia to try to re-negotiate its own maritime boundaries with Australia.
So is East Timor being ‘diddled’ in negotiating with Australia over maintaining the borders of the Timor Gap Treaty, rather than insisting on a mid-line agreement? Well, they have their own issues and concerns - and political interests are defined by taking into account all the variables. If East Timor had full sovereignty it would be obliged to protect its sovereign territory. The developments in the Timor Sea (and especially major infrastructure developments in Suai, for instance) would be likely targets for TNI/Kopassus sabotage. No oil company would invest in major infrastructure in East Timor (or be able to raise the money for such investments) in such an insecure and unstable environment. The costs to East Timor of developing an effective navy would be enormous and the defense costs of having the kind of army that could defend against major sabotage would be prohibitively high.
So East Timor also has interests in sharing sovereignty with Australia in the Timor Gap and conceding the major downstream benefits of the infrastructure developments to Australia. In return East Timor should expect significant ongoing developmental assistance in many areas and particularly training and jobs for East Timorese in the oil and gas developments.
Obviously Australia and East Timor want a friendly and cooperative relationship for the long term. A further potential sticking point exists though - analysis of the boundaries of the Timor Gap suggests the Timorese could claim territory to the east and west of the Gap - territory that is currently considered Australian. These areas contain some highly productive oil wells, which pay significant revenues to Australia. Timor has legitimate claims to these areas, and (especially after the disastrous destruction of September 99) cannot forego such vitally needed revenues. So there is another unknown variable. We need to keep watching and see how things progress.
Andrew McNaughtan, Convenor, AETA.
The Australia East Timor
Association (AETA) Updated July 5
The Australia East Timor Association was the first and longest serving solidarity organisation for East Timor in Australia.
The Melbourne Branch is 25 years old. The Melbourne Branch has an extensive book list via mail order.
Melbourne contact: John Sinnott Email: email@example.com Phone: 61 3 9416 2960 Postal address: PO Box 93, Fitzroy Victoria 3065, Australia
The Sydney Branch was formed in 1992. The Sydney Branch brings out a Newsletter [available to anyone upon request: firstname.lastname@example.org] which includes NGO Report Backs, Coming Events And Media Digest. Contact Sydney thru email email@example.com The Sydney Branch meets the 4th Wed of the month at UTS Tower Building, 3rd floor. Details Stephen Langford (02) 9331-5986.
April 2001 AETA (NSW) Newsletter: http://www.pcug.org.au/~wildwood/01apraeta.htm
Current AETA Resource List (Australia-East Timor Association): http://www.pcug.org.au/~wildwood/aetaresources.html
BD: TIMOR OIL - A collection of recent reports, position statements, petitions, articles and news