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East Timor: short-changed on oil

By Tom Clarke - posted Friday, 19 August 2005

As details begin to emerge of the proposed deal between East Timor and Australia on how to divvy up the Greater Sunrise gas field located twice as close to East Timor than Australia, it’s clear that our impoverished neighbours will be walking away short-changed.

Facing extreme levels of poverty and in desperate need of revenue, East Timor was never in an equitable negotiating position and full blame for the inadequacies of the proposed “stop gap” deal lies squarely with the stonewalling and hard-nosed Australian Government.

The Australian Government has tried to bully the poorest country in Asia out of its rightful entitlement, as a sovereign nation, to have permanent maritime boundaries. Australian negotiators want the proposed deal to hinge on East Timor accepting to postpone claims of sovereignty over the contested areas until such a time when all of the gas and oil has been depleted.


The proposed deal does not create any maritime boundaries. It simply allows for the development of one single gas field that is located in contested waters twice as close to East Timor than Australia. Leaving aside issues of sovereignty and permanent boundaries, even from a purely financial perspective, East Timor has been short-changed of billions of legally-entitled dollars.

Since the 1982 United Nations Convention on the Law of the Sea, boundaries based along the median line have been overwhelmingly favoured under International Law in cases when two countries are less than 400 nautical miles apart. Fair borders for East Timor would likely deliver most, if not all, of the Greater Sunrise field estimated to be worth more than $40 billion in government “royalties”.

Foreign Minister Alexander Downer and the Department of Foreign Affairs and Trade (DFAT) have perfected the art of muddying the waters and continue to attempt to baffle the public with complicated, but irrelevant, geological debates about the prolongation of Australia’s continental shelf.

Downer’s mantra of Australia being “generous” to East Timor with a 90:10 split of revenues from the Joint Petroleum Development Area (JPDA) conveniently ignores the fact that only one third of the contested resources are located within the JPDA.

Since 1999, the Australian Government has taken over $2 billion worth of royalties from the Laminaria-Corallina fields, which are extremely likely to belong to East Timor under International Law.

Downer and other commentators have suggested that, even if a median line resolution is accepted, it wouldn’t actually be established halfway between the two coastlines. While most International Law experts seem to dismiss this “adjusted median line” theory, it’s unclear just how significant it would be. The main fields of concern - Laminaria-Corallina and Greater Sunrise - are all located twice as close to East Timor as they are to Australia. So even if the Australian Government did successfully tinker with the median line, East Timor would still have ownership of the contested fields.


While the outcome of independent arbitration is not certain, the Australian Government’s withdrawal of recognition of the maritime boundary jurisdiction of the International Court of Justice - just two months before East Timor’s independence - cast serious doubt over the confidence of its own legal arguments.

Maritime law isn’t the only water Downer’s posse has tried to muddy. It appears the Australian Government uses inflated prices to calculate the revenue East Timor will get from oil and gas deposits and then uses much lower oil and gas prices in calculations for revenue Australia receives.

The $40 billion that East Timor could have enjoyed from Greater Sunrise dwarfed their current annual budget of just $100 million. East Timor can benefit from their legally-entitled gas and oil resources, which can help transform the fledging nation from one struggling to overcome widespread hunger, illiteracy and preventable diseases to one that can stand economically on its own two feet.

Unfortunately the proposed deal is not just a missed opportunity for Australia to lend a true and lasting helping hand but, much worse, it proves that the Howard Government is willing to bully and blackmail poor and tiny neighbours for its own financial gain. Australia’s standing in the International community is sure to suffer from this betrayal of the Australian notion of “a fair go”.

If the new deal is signed, East Timor will still be without permanent maritime boundaries and the East Timorese people’s struggle for self-determination continues. The Australian Government may have once again turned its back on its East Timorese neighbours, but the Australian people as individuals and as various collective groups, will not. We will continue to work to restore Australia’s commitment to being a responsible member of the international community and ensure that permanent maritime boundaries are established in accordance with principles of current International Law.

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About the Author

Tom Clarke is the co-ordinator of the Timor Sea Justice Campaign in Melbourne.

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