Subject: AFP: E Timor open to compromise in oil row

Also: E Timor wants end to oil row; Beggar thy neighbour

Friday, June 4, 2004. 5:14am (AEST)

E Timor open to compromise in oil row

East Timor says it is willing to reach a compromise with Australia to solve a long-running territorial dispute over seabed oil and natural gas deposits between the two countries.

"Our Government is totally available to find creative ways to reach a solution," East Timor's Foreign Minister Jose Ramos-Horta told a conference in Lisbon.

"And when we speak of creative forms, obviously we mean reaching some form of a compromise where neither of the two parts insists on having their main demands met."

Australia wants to keep the maritime border agreed with Jakarta when East Timor was an Indonesian province, which follows the country's continental shelf.

That border leaves about two-thirds of the oil and gas deposits in the Timor Sea in Australia's hands.

But Dili argues that under current international maritime law, the border should be in the middle of the 600 kilometres of sea between the countries, which would give it 90 per cent of the underlying oil reserves.

East Timor, which recently celebrated its second anniversary of independence, says Jakarta only agreed to that deal in exchange for Canberra's recognition of its illegal annexation of East Timor.

The boundary has been the centre of a protracted dispute between impoverished East Timor and its giant neighbour, with energy deposits worth an estimated $A30.4 billion in royalties at stake.

A report issued last month by international aid group Oxfam said Australia's refusal to cede more royalties from the seabed resources to East Timor risked turning the poverty stricken new nation into a failed state.

Just two months before East Timor became independent from Indonesia in May 2002, Australia announced it would no longer accept the jurisdiction of the International Court of Justice on maritime borders.

The move left Dili with no independent forum to judge their claim that the border should be drawn in the middle of the sea separating the two countries and was described by East Timor Prime Minister Mari Alkatiri at the time as "a hostile act".

-- AFP

-- The Australian

E Timor wants end to oil row 
From correspondents in Lisbon, Portugal 04jun04

EAST Timor said today it is willing to reach a compromise with Australia to solve a long-running territorial dispute over seabed oil and natural gas deposits between the two countries.

"Our government is totally available to find creative ways to reach a solution," East Timor's Foreign Minister Jose Ramos-Horta told a conference in Lisbon.

"And when we speak of creative forms obviously we mean reaching some form of a compromise where neither of the two parts insists on having their main demands met."

Australia wants to keep the maritime border agreed with Jakarta when East Timor was an Indonesian province, which follows the country's continental shelf.

That border leaves about two-thirds of the oil and gas deposits in the Timor Sea in Australia's hands.

But Dili argues that under current international maritime law, the border should be in the middle of the 600 kilometres of sea between the countries, which would give it 90 per cent of the underlying oil reserves.

East Timor, which recently celebrated its second anniversary of independence, says Jakarta only agreed to that deal in exchange for Canberra's recognition of its illegal annexation of East Timor.

The boundary has been the centre of a protracted dispute between impoverished East Timor and its giant neighbour, with energy deposits worth an estimated $US21 billion ($30.3 billion) dollars in royalties at stake.

A report issued last month by international aid group Oxfam said Australia's refusal to cede more royalties from the seabed resources to East Timor risked turning the poverty stricken new nation into a failed state.

Just two months before East Timor became independent from Indonesia in May 2002, Australia announced it would no longer accept the jurisdiction of the International Court of Justice on maritime borders.

The move left Dili with no independent forum to judge their claim that the border should be drawn in the middle of the sea separating the two countries and was described by East Timor Prime Minister Mari Alkatiri at the time as "a hostile act".

With much of its infrastructure destroyed by violence by Indonesian-backed militias that accompanied its 1999 independence referendum, East Timor is one of the poorest countries in the world.

More than half of adults in the former Portuguese colony are illiterate, only one in three houses has electricity and one in five has drinking water.

--

Copyright © 2004 The Economist Source: Financial Times Information Limited - Europe Intelligence Wire.

Beggar thy neighbour

June 3, 2004 9:24pm Europe Intelligence Wire

Rich Australia and poor East Timor are arguing again

FOR East Timor, the second anniversary of independence, on May 20th, was not a happy time. The occasion was overshadowed by a bitter dispute with its rich neighbour, Australia, over access to big oil and gas reserves beneath the Timor Sea that divides the two countries, resources which East Timor says would make the difference between economic self-sufficiency and "begging" for aid to survive.

After pressure from East Timor, talks with Australia opened in Dili, the East Timorese capital, on April 19th aimed at establishing a permanent sea boundary, and thus the division of resources worth tens of billions of dollars. The atmosphere was prickly. Alexander Downer, Australia's foreign minister, later accused East Timor of having made "a very big mistake" by "trying to shame Australia, accusing us of [being] bullying and rich and so on, when you consider all we've done for East Timor." Xanana Gusmao, East Timor's president, replies: "We are not shaming Australia. We are only telling the truth."

Australia did indeed play the leading role in the multinational force that oversaw East Timor's transition to independence, after much bloodshed, five years ago. That helped assuage the guilt many Australians felt over their country's acquiescence in almost 25 years of Indonesia's occupation of the former Portuguese colony. But after independence in May 2002, East Timor seemed to recede from the Australian government's radar screen, to be replaced by global terror and chaos in the Solomon Islands.

East Timor, meanwhile, has languished as one of the world's poorest nations. A recent report by Oxfam Australia, an aid agency, said that one in ten East Timorese children was likely to die before the age of five. It claims that Australia has already received ten times more from Timor Sea oil and gas revenue than it has given East Timor in aid since 1999. Canberra's stand on the boundary talks - the agency argues - could "push East Timor to the brink of becoming a failed state". Mr Downer said the report was "emotional claptrap which is being pumped up by left-wing NGOs."

Some of the disputed resources lie in a zone known as the Timor Gap that Australia and Indonesia excluded when they delineated their seabed boundary in 1972. Seventeen years later the two countries signed a deal to divide government revenues from this zone evenly between them. Mr Gusmao now describes that deal as "illegal and illegitimate" because of Indonesia's occupation of East Timor at the time. At independence, Australia signed an interim treaty with East Timor, giving the new nation 90% of revenues from within the "joint development area", as the gap is now called, and Australia 10%.

This arrangement covers the Bayu-Undan gas field, due to start production this year. But it excludes most of Greater Sunrise, a more lucrative gas field that lies mostly outside the area, and all of the Laminaria-Corallina oil field, from which Australia has been taking all revenues since it started pumping in 1999. East Timor suggests putting the money into an escrow account until the dispute is resolved.

In the talks that opened in April, East Timor is asking Australia to agree to a permanent median line between them, which, it argues, would accord with international law. Such a line would place almost all of the known oil and gas fields in East Timorese waters; Dili's negotiators say this would mean a difference of between $2.8 billion and $8.6 billion in revenues for East Timor. Australia, however, withdrew from the International Court of Justice's jurisdiction on maritime boundary questions shortly before East Timor's independence, so the issue cannot be referred to arbitration. Mr Gusmao says of this: "Australia behaved in bad faith."

East Timor now wants monthly meetings, with a view to a quick resolution; Australia has put the next lot off until September, proposing only two rounds a year. At such a pace, a lot of the oil will be gone before the dispute is settled.

Copyright © 2004 The Economist Source: Financial Times Information Limited - Europe Intelligence Wire.


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