Also: article by Nigel Wilson

The Weekend Australian

May 29, 2004 Saturday All-round Country Edition

Bedevilled in the Timor Sea

Sian Powell

The East Timorese see Australia's claims as daylight robbery. Jakarta correspondent Sian Powell reports

FOR the East Timorese, it's simple. Scratch a diagram of the Timor Sea into the dirt, with the island of Timor on one side and the great landmass of Australia on the other, and draw a line between them.

Everything on the East Timorese side of this median line belongs to East Timor, they say -- easy as that. Yet the map becomes fiendishly contentious if there's lucrative oil and gas beneath that median line, and if there are north-south considerations as well as east-west.

The difficulty is compounded if the disputing neighbour is Australia, a nation that sent in troops in East Timor's hour of need in the bloody months of 1999.

Australia prefers a maritime boundary based on its continental shelf, which stretches north far past the median line, and maintains this is in accordance with standard international maritime law. Yet the East Timorese believe they are morally and legally in the right in arguing for a border equidistant from the two nations, a border that would afford East Timor a much bigger slice of the oil and gas pie.

East Timorese leaders, notably President Xanana Gusmao and Prime Minister Mari Alkatiri, have been tenaciously fighting the East Timor corner, playing the shame game for all they're worth. Gusmao has even bluntly accused Australia of robbing East Timor.

In his welcome speech at last month's first substantive maritime border negotiations in Dili, Alkatiri laid it all on the line. "For Timor-Leste, this is not an academic exercise," he said. "A boundary determined in accordance with established principles of international law -- as embodied in the UN convention on the law of the sea and as spelled out in decisions of the International Court of Justice -- would triple the income of our country."

That's the difference between life and death for a nation as grindingly poor as East Timor, he says. According to an Oxfam report released a week or so ago, fewer than half all adult East Timorese can read or write and one in 10 East Timorese babies born today will die before the age of five.

Australia has been generous in other ways, the East Timorese say, but now the long-beleaguered people are demanding what they believe is rightfully theirs.

There is a broad consensus in East Timor, says Secretary of State for Investment Jose Teixeira. He has travelled extensively through the tiny nation, and says even the farmers who can't read and write know what's theirs. "These are our resources, and we have a right to them" is the common feeling, he says.

The students sat outside the Australian embassy in Dili's main street, and played loud songs and brandished placards saying "F--- your petrol arrogance", "Don't steal our future" and "Where is our $US1 billion?".

Gaudencio Sousa, 21, a protest organiser, says he's not there for short-term gain of oil and gas riches. "It should be for the generations to come, for our future," he says.

The next set of border negotiations is scheduled for September, much to Dili's irritation. The East Timorese resent the casual arrogance of Australia's delaying tactics: they insist the border negotiations should occur more often than twice a year.

The tiny nation can't afford a 20-year negotiation; three years, the leaders say, would be good. The East Timorese Government has even offered to chip in if Australia can't afford the resources for more frequent meetings.

"We want this issue resolved in accordance with international law," says Teixeira. "We want a commitment to a speedy resolution of this issue."

Yet it's unlikely to be a judicial resolution. Just before the joyous celebrations of East Timor's independence in May 2002, Australia declared it would not be bound by International Court of Justice rulings on maritime borders. Even worse to the East Timorese, since 1999 -- when militias were devastating East Timor -- Australian-licensed exploitation began in disputed areas -- robbing the half-island of $US1million ($1.4million) a day or $US1.5 billion to date.

The money from the disputed fields could be put into an escrow account until the dispute is resolved, East Timor has suggested. No answer so far from the Australians.

"Unfortunately, Australia has not only refused to exercise restraint in the disputed area, it has actually awarded new licences in this area since our formal protest last November," Alkatiri says.

The lucrative Laminaria-Corallina and Buffalo fields are in a disputed area immediately west of the joint development zone agreed to by East Timor and Australia. It's there that the lateral border dispute heats up, with East Timor saying its maritime borders should be pushed out to the west and east into the wealth of the Greater Sunrise field.

This could start getting tricky with Indonesia, presenting difficulties for East Timor, a baby nation whose leaders know very well that the might of 220 million Indonesians has to be courted assiduously. But these borders are made of liquid diamond: move them just a little to the east and west, and East Timor will rake in $US12billion over 30 years rather than $US4billion. Money in the bank, the East Timorese say, rather than cap in hand.

--

Weekend Australian

Bedevilled in the Timor Sea

By Nigel Wilson

May 29, 2004

FOREIGN Minister Alexander Downer tells Inquirer he has instructed his department to get on the front foot over the maritime boundary dispute with East Timor. Although Downer does not agree the David and Goliath case promoted by East Timor is damaging Australia's international image, he does concede Australia has been tardy in putting its case.

As it is four years since Mari Alkatiri, now East Timor's Prime Minister, and Peter Galbraith, now the lead East Timor negotiator on the boundary, told Downer of their intention to pursue a median line boundary, some would argue the department has taken a long time to get up to speed.

The core of the disagreement is that East Timor does not recognise arrangements over boundaries negotiated between Australia and Indonesia. As well, a US company, PetroTimor, has begun legal action in a US district court claiming it is the rightful holder of Timor Sea leases issued by Portugal that, it alleges, were stolen at the time of Indonesia's invasion of East Timor in 1975.

Australia is adamant the existing arrangements for administering petroleum resources should be the basis for the eventual maritime boundary and is prepared to play tough.

Gillian Triggs, director of the University of Melbourne's Institute for Comparative and International Law, says it is a persuasive but misleading myth promoted by East Timor that the seabed between the two countries should be based on a median or equidistant line. She says international law does not require a median line where states do not have a continental shelf in common.

"As a matter of geology, Australia is on a continental shelf; East Timor is not," Triggs says. "Australia has consistently maintained its sovereignty over the continental shelf up to the Timor Trough, a major geological feature 3000m deep and about 40 nautical miles from East Timor."

Triggs says the 1972 Seabed Agreement settling the boundary between Indonesia and Australia, which led ultimately to the Timor Gap treaty in 1989 that covers the areas in dispute, is entirely consistent with a 1969 ruling of the International Court of Justice. "These ideas are echoed by the 1982 UN convention on the law of the sea," she adds.

Even so, officials from some oil and gas companies with projects and prospects in the Timor Sea say both the Department of Foreign Affairs and Trade and Downer were woefully under-prepared to deal with East Timor's sovereignty claims in the aftermath of the Australian-led military action in September 1999 that stopped the murderous attacks of Indonesia-backed militias.

Downer disclosed this week his department would soon publish a document setting out the Australian position, including the legal framework on which it is based. The aim is to counter a burgeoning international and domestic campaign - which has reached as high as the US Congress - that claims Australia is greedy by not handing over control of Timor Sea oil and gas acreage to East Timor. He warned the increasing attacks by East Timor on Australia's position on the boundary were "very unwise" and could damage the bilateral relationship.

The continental-shelf position Australia is taking with East Timor is no different from boundary negotiations with Indonesia, Papua New Guinea, New Zealand and France on New Caledonia. There is also no legal validity for the argument that Australia, as a rich country, should hand over sovereignty to "poor" East Timor.

"It's an argument that Mexico, being a poor country, might try with the US to take over Texas with rather more historic claims than East Timor has with us," Downer tells Inquirer. "But I wouldn't fancy Mexico's chances. For us, the East Timor argument could be applied to PNG, Indonesia and New Zealand, and would still fail in international law."

He acknowledges these are countries poorer than Australia but that Australia's approach has been to assist them through means other than by handing over areas that are legally Australia's under international law.

Australia and East Timor have just begun negotiating boundaries that would supersede two agreements between the governments about 18 months ago covering resource exploitation in the Timor Sea, the vast, shallow ocean lying between Darwin and East Timor.

Downer says these agreements, concerning the development of the Bayu Undan oil and gas project now being commissioned 450km northwest of Darwin and the potential development of the Greater Sunrise field, were entered into voluntarily by East Timor.

"No one was holding a gun to their head and East Timor should honour them," he says.

Bayu Undan, estimated to contain 3.2 trillion cubic feet of gas and operated by US giant ConocoPhillips, lies totally within the so-called joint petroleum development area outlined in the Timor Sea treaty between Australia and East Timor signed on May 20, 2002, in Dili - East Timor's Independence Day.

Greater Sunrise's 7.8 trillion cubic feet gas reserves straddle the border of the joint petroleum development area, with 20 per cent of its gas calculated to lie within the area.

Downer says compared with the previous arrangement with Indonesia, which split revenues 50:50 between the two countries, East Timor has a generous deal because the new arrangement splits revenue 90:10 with the Dili administration.

Australia and East Timor also have negotiated an agreement in which East Timor would receive 90 per cent of revenues from the 20 per cent of Greater Sunrise laying within the joint petroleum development area, but Alkatiri is refusing to put this to his parliament for ratification.

Woodside Petroleum, which leads the group of international companies proposing to develop a $5 billion export liquefied natural gas project on Greater Sunrise, says no development will proceed until ratification is achieved.

Galbraith, a son of US economist, J.K. Galbraith, and a former US diplomat who works for a Washington-based international relations think tank, argued this week that East Timor's ratification might depend on Woodside convincing the Australian Government to change its position on the boundary. That seems highly unlikely.

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