3 July 2001
The Arrangement is the product of lengthy negotiations between Australia and East Timor/United Nations representatives. It was finalised at meetings we held last week in Canberra with East Timorese Cabinet Members Mr Jose Ramos-Horta and Dr Mari Alkatiri and UNTAET representative Mr Peter Galbraith.
Australia has always indicated that it wants an Arrangement which will provide the future independent East Timor with a substantial and long-term revenue flow to support its development. Given East Timorís recent history, this is an objective that we believe is shared by all Australians.
The new Timor Sea Arrangement does this, building on the extensive assistance Australia has already provided to East Timor. Over the 20 years from 2004, East Timor is estimated to receive substantially more than $7 billion in revenue from the existing and planned developments in the area. Australia will receive about $1 billion in direct revenue over that period, although it will also receive very substantial downstream benefits as a result of projects in the Northern Territory.
In addition, the Arrangement provides the companies planning major oil and gas developments in the area with the certainty they require to proceed with those investments, to the benefit of both countries. This has been a major focus for Australia in the negotiations. Australia and East Timor will be working with the companies to ensure effective implementation of the Arrangement.
The terms of the Arrangement are to be incorporated into a new treaty upon East Timorís independence, replacing the existing agreement between Australia and the United Nations.
The key elements of the Arrangement are:
a revenue split of 90 per cent for East Timor and 10 per cent for Australia from petroleum development activities in the Joint Petroleum Development Area (JPDA);
deferral of delimitation of a permanent seabed boundary without prejudice to Australiaís and East Timorís rights or entitlements;
maintenance of the contractual terms of the existing petroleum/gas projects (Bayu-Undan, Greater Sunrise and Elang-Kakatua);
Australian jurisdiction over the planned pipeline from the JPDA to Australia;
unitisation of the Greater Sunrise field (which straddles the JPDA and an area under Australian jurisdiction) on the basis that 20 percent of the field lies within the JPDA and 80 percent of the field lies within Australian jurisdiction;
and the new treaty will have a duration of 30 years.
Australia has also agreed to provide additional financial support to East Timor of A$8 million per year with effect from 2005, to assist with petroleum resource development.
Australia is committed to a strong and productive relationship with the newly independent state of East Timor. The conclusion of the Timor Sea Arrangement is a significant milestone in the development of our relationship.
Matt Francis 0419 206 890
James Kelly 0408 686 541
Caroline Coleman 0409 438 680
Jennifer Grove 0407 467 870
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