Subject: AT: Tussle Over Timor Sea Oil and Gas Resumes

Inter Press Service via Asia Times

Tuesday, March 8, 2005

Tussle Over Timor Sea Oil and Gas Resumes

CANBERRA - Canberra and Dili entered a new round of negotiations - the third so far in a year - as Australian and East Timorese officials on Monday again deliberated on how to divide up oil and gas deposits under the Timor Sea.

After nearly a year of negotiations, both sides may finally be willing to compromise on carving up the oil-rich Timor Sea energy reserves, worth an estimated US$32.07 billion. East Timorese Foreign Minister Jose Ramos Horta said he is confident an agreement can be reached, possibly as early as the middle of the year.

This week's discussions will focus on a compromise that would involve setting aside permanent maritime boundary talks for up to a century. East Timor is also keen to look at ways it could benefit from downstream processing projects, as well as the potential for jobs based in Darwin to go to East Timorese workers.

Negotiations reached a stalemate at the end of last year, with East Timor accusing Australia of issuing ultimatums and adopting a "take it or leave it" attitude toward its smal neighbor. This time around, however, the Australian government is under increasing domestic and international pressure to expedite the resolution of a fair sea boundary with East Timor, one of the world's poorest countries.

A delegation of community leaders, led by Catholic Bishop Hilton Deakin, presented a letter to a Department of Foreign Affairs and Trade representative in Canberra on Monday afternoon, urging Australia to respect East Timor's legal entitlements under international law. The group, which includes Australian Greens Senator Bob Brown, claims negotiators have not accurately reflected the Australian peoples' values of fairness and justice, and it is urging the government to set the maritime boundaries halfway between the coastlines of East Timor and Australia. Senator Brown said the government was thinking of delaying a decision on boundaries because more time would work in its favor.

"By attempting to postpone an agreement on maritime boundaries, the Australian government is conveniently ignoring the fact that most, if not all, of these oil and gas fields would belong to East Timor if permanent maritime boundaries were drawn in accordance with current international law," he said.

Meanwhile, Australian businessman Ian Melrose has renewed a prime-time television advertising campaign bluntly criticizing the Australian government's negotiating position over the boundary. "The (Prime Minister John) Howard government has stolen A$2 billion (US$1.57 billion) in tax revenue from gas and oil royalties, which East Timor needs to create a working health system," the advertisement states.

Melrose, who has pledge to run a multi-million dollar campaign over the next three years on the issue if necessary, is not confining his efforts to television.

Full-page advertisements appeared on Monday in a number of major newspapers, featuring an open letter from community leaders. "We strongly believe that the positions you take to these meetings should reflect the views of the people of Australia, the people you represent, and our values of fairness and equity," the advertisement adds. "While we recognize the dire need East Timor has for revenue, we understand that this is not a matter of charity, but one of justice," it continues.

The dire economic and social conditions that most East Timorese face are no better reflected than in the area of health care, as highllighted by Melrose's advertising campaign. The majority of the population lives in rural villages, often isolated and far from medical facilities or hospitals. The roads are impassable during the wet season, electricity is scant and telecommunications are next to non-existent. Curable and preventable diseases are life threatening for most in these circumstances.

The United States has also gotten in on this latest debate. Last Friday 17 members of the US Congress, including Republicans, Democrats and an independent representative, wrote to the Australian government urging the adoption of a fair boundary. The letter stated their hope that an expeditious resolution of the boundary would allow the people of East Timor to escape "the oppression of poverty that is preventing them from progressing as one of the world's newest democracies".

In September 2004, under growing domestic and international condemnation, Australian Foreign Minister Alexander Downer expressed optimism that an agreement could be reached by the end of December in order to facilitate the proposed Greater Sunrise oil and gas project, estimated to be worth $35 billion.

But after the Howard government was re-elected on October 9, talks broke down, with East Timorese representatives arguing that Australia had reneged on its earlier offer of more generous revenue sharing.

Earlier this year the proponents of the Greater Sunrise project, a consortium of global oil and gas companies including Woodside, ConocoPhillips, Shell and Osaka Gas, put the project on hold after East Timor refused to legislate in support of the project before the resolution of the sea boundary dispute.

East Timor, which broke away from Indonesian rule in 1999 but remains largely dependent on foreign aid, says the border in the sea should be drawn at the midpoint between the two countries. Australia says the boundary should be defined by the continental shelf, which in some places lies less than 80 kilometers from East Timor's southern coastline.

Australia opposes any change to the boundary it negotiated with the Indonesian government. This established a Joint Petroleum Development Area (JPDA) over the bulk of the most prospective oil areas with revenues to be shared between the two countries.

According to this agreement, East Timor would gain 90% of the royalties from projects such as the small Bayu-Undan oil and gas project that is currently being exploited within its portion of this area. However, the entire Laminaria-Corallina field and the bulk of the Greater Sunrise deposit lies on Australia's side of the current boundary.

In a background briefing for journalists two weeks ago, a Department of Foreign Affairs and Trade official said Australia was only willing to discuss a "creative solution" involving the current boundaries but not the resolution of a permanent maritime boundary. "Our position is that the permanent boundaries should be put off for quite some considerable time. At least until the resources have been exploited," the official said.

East Timor's supporters argue that the Australian government has every incentive to drag its feet in the negotiations for as long as possible.

Since 1999 the Australian government has received more than $1.5 billion in revenue from the Laminaria-Corallina field, which is far closer to East Timor than Australia. If the maritime boundary were drawn as a mid-point between the two countries - as is current international standard - the royalties owing to East Timor would triple.

Proposals by East Timor's supporters that the revenue from this project should be set aside in a separate fund until the boundary is resolved have been repeatedly rejected by Australia.

East Timor has also proposed the boundary dispute should be arbitrated by the International Court of Justice. But in March 2002, just two months before East Timor gained its independence from Indonesia, Australia withdrew from the section that deals with maritime boundary disputes.

Ahead of this week's talks, Foreign Minister Ramos Horta told reporters that his fledgling country could be amendable to putting the permanent boundary issue aside if it obtains a fairer division of the economic benefits.

However, East Timorese suggestions that the processing plant associated with the Greater Sunrise project be located in East Timor and a proportion of jobs be filled by East Timorese workers are opposed by Australia.

Whatever the outcome, Tom Clark, spokesperson for the Timor Sea Justice Campaign, said he hopes that in this week's talks "Australia stops trying to short-change East Timor and ensures that it guarantees what East Timor is entitled to under international law". - Asia Pulse/Inter Press Service)

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