Under pressure, East Timor signs rotten oil deal

Green Left Weekly - January 25, 2006

Jon Lamb -- On January 12, Australia and East Timor signed a deal establishing a 50-50 split of royalties from the lucrative Greater Sunrise gas field in the Timor Sea. The Certain Maritime Arrangements in the Timor Sea (CMATS) rules out East Timor's right to establish a maritime boundary in the Timor Sea for at least 50 years, while guaranteeing the Australian government and big-business access to billions in royalties and downstream revenues from oil and gas fields that rightfully belong to East Timor.

The Greater Sunrise deal follows three years of bullying and stand-over tactics by Canberra, including threats to withdraw aid to the East Timorese government. Not only has the Howard government refused to abide by international law governing maritime boundary disputes, it has accused the poverty-stricken East Timorese nation of being "greedy", of wanting the resources it is entitled to under international law.

The response in East Timor to their government's agreement to the CMATS terms has been mixed. A major concern among various sectors is the Fretilin government's acquiescence in foregoing East Timor's territorial rights. On January 11, the directors of the Commission for Justice and Peace from the diocese of Dili and Bacau and the Centre of Information for the Timor Sea called for the maritime boundary dispute to be settled first.

A co-ordinator of the Melbourne-based Timor Sea Justice Campaign, Tom Clarke, described the deal as a "stop-gap, band-aid solution that will enable the commercial development of the field without the Australian government acknowledging East Timor's sovereign rights to this and other fields on East Timor's side of the median line".

He criticised the Australian government for refusing to negotiate permanent maritime boundaries until all of the oil and gas has been taken and to unilaterally deplete the Laminaria-Corallina and Buffalo fields.

While East Timor was forced into a compromise to defer settling the maritime boundaries, so too was the Howard government which was forced to accept that East Timor receive a 50% royalty share -- a substantial increase from 18%. This means that East Timor's royalties will now be US$15 billion or more, a substantial increase from around $6 billion. This increase came about largely because the East Timorese negotiators refused to accept the original rotten deal, and were supported by various solidarity movements.

"The combined impact that Australian grassroots pressure, businessperson Ian Melrose's television commercials, international pressure, the work of trade unions and churches, and all of the Timor Sea Justice Campaign's supporters, have had in significantly shifting Canberra's position over the past 18 months", said Clarke.

The US-based East Timor and Indonesia Action Network (ETAN) said on January 15 that while it understood the pressure on East Timor to sign the deal, it "believes that Timor-Leste could have gained more by holding out longer". "Worldwide and grassroots pressure on Australia was only beginning to be effective. Income from the Bayu-Undan field is already surpassing Timor-Leste's current financial needs, and will do so for the next 15 years", ETAN stated.

The CMATS allows for the Australian government to continue issuing contracts (or maintaining developments) in previously contested areas in the Timor Sea. East Timor is also likely to lose out on downstream revenue generated by the Greater Sunrise field, with the main operators -- Woodside Petroleum, Conoco Phillips and Shell -- indicating they favour re-processing the gas on land (possibly at the gas processing plant in Darwin) rather than piping it to the much closer East Timor.