Wednesday, June 21, 2000 Sydney Morning Herald

Timor Gap deal set to deliver windfall for Dili By MARK DODD, Herald Correspondent in Dili

Negotiations between the United Nations and Canberra for a new Timor Gap treaty could see up to $US100 million ($166 million) a year in oil and gas revenue flowing to East Timor, senior UN officials say.

A team from the UN Transitional Administration in East Timor (UNTAET) finished a second round of negotiations in Canberra on Saturday. The talks have been working towards a new treaty between Australia and East Timor, which is soon to become independent.

If successful, East Timor could receive double the amount of revenue it was entitled to under the old agreement negotiated in 1989 between Australia and Indonesia, UN officials said.

The latest bargaining follows a first round in March that got off to a frosty start. The so-called Timor Gap covers a coffin-shaped parcel of the Timor seabed containing large deposits of oil and gas.

Two of the main oilfields have estimated reserves of 130 million to 250 million barrels of oil.

Estimates of the total amount of gas in the Zone of Co-operation are the energy equivalent of 1.4 billion to 1.8 billion barrels of oil, the measurement used by the industry. By comparison, Bass Strait has oil reserves totalling around 370 million barrels.

On February 25 Australia and UNTAET signed a $US1.4 billion agreement for the development of gas recycling and exploration covering the Bayu Undan fields. Production is expected to start in January 2004 and under the old 1989 agreement could generate up to $US40 million in revenue for East Timor.

"UNTAET is acting as the agent of the East Timorese people," said Mr Peter Galbraith, the head of the administration's political department. "What UNTAET seeks is what the East Timorese seek.

"The East Timorese leadership has made it clear that the critical issue for them is to maximise the revenues of the Timor Gap.

"The legal situation is this: UNTAET has to continue the terms, but only the terms of the old Timor Gap Treaty and only until independence. Therefore a new regime will have to be in place on the date of independence."

A new treaty is required because East Timor voted overwhelmingly last August for independence from Indonesia, which invaded the former Portuguese colony in 1975, a bloody land grab that went unrecognised by the UN and most Western countries - but not by Australia.

In 1978, Canberra declared its support for the Indonesian occupation, a move which allowed negotiations to start for rights to the Timor Gap.

After 10 years of tedious bargaining, in December 1989 the then Australian foreign minister and his Indonesian counterpart signed the Timor Gap Treaty, which carved up the seabed into three areas, with the zone in the middle - the richest area, about the size of Tasmania - to be jointly developed.

"It was the triumph of politics over morality," said Dr Keith Suter, president of the Centre for Peace and Conflict Studies at the University of Sydney.

"Australia negotiated with a country that had taken over East Timor by force, whose occupation was accepted by only a minority of the world's countries and an occupation resisted by the East Timorese themselves."

A more equitable share of Timor Gap wealth in East Timor's favour would be extremely important in helping the impoverished territory achieve a measure of economic self-sufficiency and could double the nation's budget by the end of the decade, one expert predicted.

The next round of bargaining is scheduled for December and an agreement is believed to be close. 

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