Strategic Issues: Australia siphoning off East Timor’s oil and gas reserves

One time mentor and champion of East Timor’s sovereignty, Australia, is siphoning off of her oil and gas reserves in the Timor Sea in total disregard to UNCLOS 1982.

When Portugal effectively abandoned East Timor, (a colony since 16th century), located on the eastern part of Timor Island on Nov 1975, Indonesia controlling West Timor naturally entered East Timor just like Indian troops marched and occupied Goa in 1961, a Portuguese colony since 1510. Though none raised hue and cry against forcible occupation of Goa, including Portugal, yet she continued to support and train Fretilin separatist guerillas all through the years and predominantly Muslim Indonesia miscalculated the range of activities of the so-called champions of independence.

Following the 1999 violence, Australia led the International Force for East Timor which restored security in East Timor and continued to play a leading role in the follow-on UN peacekeeping missions and had been the front-line support for her transition to independence. When it was clear that Indonesia’s rule in East Timor was breaking down, the Australian government hatched farfetched plans to ensure dominance in the Timor Sea at any cost. The leading role played by Australia in the 1999 UN intervention into East Timor was actually aimed at ensuring that the tiny state remains firmly under Australian financial and military domination. Finally with strong help from Australia, Portugal and other western powers, Democratic Republic of Timor-Leste commonly known as East Timor was born in May 2002.

The unstable government in East Timor has always been dependent upon the troops, police and economic aid of Australia, which was provided mainly to exploit the dispute of East Timor’s the Greater Sunrise Unit area and Bayu-Undan oil and gas fields and specially Joint Petroleum Development Area (JPDA) in the Timor Sea.

The position of the Timorese government, led by ex-Fretilin separatist leaders President Xanana Gusmao and Prime Minister Mari Alkatiri, was that the question of the maritime boundary and sovereignty had to be settled as the basis for determining the rights of the two countries. Timorese government requested monthly talks on the sea boundary and a settlement within five years and the Australian government insisted on talks every six months and resolution in 99 years. For obvious reasons known to all, during the recent crisis in East Timor, Australia again responded quickly to the East Timorese government’s request for assistance to help stabilise the domestic security situation.

Australia continued to put pressure on the new government of Timor which was facing lots of problems at home, to sign a new Timor Sea Treaty (TST) so as to facilitate Australia’s control of the seabed resources. Despite the new government’s almost total economic and military dependence on Australia, the then PM refused to sign away its right to negotiate new maritime boundaries. It however had to sign the TST in 2002 “without prejudice” to a final settlement of the sea boundary. At every meeting since then, Australia has blocked any such settlement. Among other things, Australia might have thought that a renegotiated border with East Timor may invite Indonesia to dispute the boundary with Australia established by the 1972 TST. Normally a dispute such as this could be referred to the International Court of Justice and the International Tribunal for the Law of the Sea for an impartial decision, sudden Australia’s unilateral announcement in March 2002, that it would no longer accept maritime border rulings by these UN bodies, underscored the government’s real intention as regards to their calculated move towards the oil and gas resources of East Timor. This factor in part also explains Australia’s treatment toward East Timorese negotiators and the callousness displayed toward the welfare of the population it claimed to have “liberated” in 1999.

In late 2003, East Timor demanded Australia stop pilfering the Laminaria-Corallina royalties until the boundary issue was settled. However, Australia ignored the request as the field will be exhausted within a few years. Since the field began operating in November 1999, the Australian government has earned about US$ 2 billion while East Timor has received nothing. In 2003 alone, Australia received US$ 172 million in royalties from Laminaria-Corallinatwice as much as the entire budget of the East Timorese government. The most important point to note is that if the 1982 United Nations Convention on the Law of the Sea (UNCLOS) were applied correctly, the international boundary would be along a line equidistant from the land territories and the only fully operating field, the Laminaria-Corallina, would fall entirely under East Timorese control.

Australia maintained that she has been generous in its dealings with East Timor, as it has given East Timor 90 percent of the revenue from the Bayu-Undan field. However, if the UNCLOS rule were applied there as well, East Timor would have been entitled to 100 percent of the revenue from the Bayu-Undan field. Far from being generous, Australia has exploited East Timor’s desperate need for revenue from Bayu-Undan to force the special concessions that had to be made over the much larger Greater Sunrise field. Australia stalled the necessary parliamentary legislation allowing the development of the Bayu-Undan until the last minute, threatening the whole project with collapse. This manoeuvre forced the East Timorese government to agree to the proposal of surrendering Greater Sunrise Area.

The East Timorese parliament, in an attempt to maintain some bargaining power, refused to initially ratify it. However, four years of intimidation by the Australian negotiators continued unabated unless East Timor agreed to sign a separate protocol covering the Greater Sunrise field. The latest agreement, however, concedes it under conditions where the Bayu-Undan fields will be exhausted in about 15 years.

The unresolved question of sovereignty also deprives East Timor of any part of the servicing and processing involved with the fields, all of which is now concentrated in the Australian city of Darwin. While there is little infrastructure in East Timor, sovereignty over the Timor Sea resources would have given the Timorese state a say in the rate of exploitation of the fields and led to some transfer of skills and employment. The Greater Sunrise protocol, signed by Australia and East Timor in 2003, and came into force in 2007, now provides the secure legal and regulatory environment required for the development of the Greater Sunrise oil and gas reservoirs. Under the TST, both Australia and East Timor are bound by the treaty to refrain from asserting or pursuing to rights, jurisdiction or maritime boundaries in relation to the other for 50 years.

The two governments have also undertaken not to commence any dispute settlement proceedings against the other that would raise the issue of maritime boundaries in the Timor Sea. Greater Sunrise area is apportioned on the basis that 20.1 per cent falls within the JPDA and the remaining 79.9 per cent falls in an area to the east of the JPDA over which Australia exercises exclusive seabed jurisdiction. This apportionment reflects the geographical location of the resources. Due to the agreed resource split in the JPDA, under this protocol East Timor would receive tax revenues from 20.1 per cent of the Greater Sunrise resource and Australia would receive tax revenues from 79.9 per cent.

According to the maritime experts, this one-sided deal will be worth in the region of an additional billion dollar to East Timor. However, its main consequence is that Australia has succeeded in having East Timorese government drop its claim of sovereignty over key resource-rich areas of the Timor Sea for generations to be commercially exhausted.

Finding no other option from her one-time mentor who helped her to secede from Indonesia, she has now agreed so for a relative peanut, and given that the total royalties from the Greater Sunrise field over its projected life may reach US$ 38 billion, despite the field lying much closer to its territory than Australia.

Under the new agreements, Australia will continue to exercise continental shelf jurisdiction outside the JPDA and south of the 1972 Australia-Indonesia seabed boundary. East Timor will be able to exercise fisheries jurisdiction within the JPDA. A Maritime Commission will also be established to enable high-level dialogue on a range of important issues facing Australia and East Timor in the Timor Sea, including the management of security threats to offshore platforms and cooperation in managing fisheries resources.

It has now been reliably learnt that the claim of the Australian government to have sent thousands of troops to East Timor for purely humanitarian purposes is not true, rather it was a scramble for oil and gas. The signing of the two Timor Gap documents and the presence of 4,000 Australian military personnel in East Timor clearly demonstrates their real mission about the urgency of protecting Australian corporate and strategic interests in the Timor Sea.

Among the most revealing aspects of recent events in East Timor has been the almost complete silence of the Australian media about the two agreements signed by the Australian government to secure control over the multi-billion dollar oil and natural gas reserves beneath the Timor Sea. No headlines, photographs or commentary greeted either signing ceremony or the official announcement in each other’s capital. The recent announcement clears the way for a $1.4 billion project in the Bayu-Undan field, which is about 500 kilometres north-west of Darwin, and 250 km south of East Timor.

It is apparent that Australian policy has shifted from being the West’s most ardent defender and champion of the right of the Timorese people to self-determination. Even the form of the Timor Sea treaties highlights the colonial character of the new arrangements. The initial signatory for East Timor was the UN Administrator, who held complete power over the former Portuguese colony and the treaties will legally bind any incoming East Timorese government, and in spite of some lukewarm efforts by the Timorese government this was the culmination of more than four years of bullying that the government of Australia finally ensured effective Australian economic and political control of the offshore border region and the wealth beneath its waters.

As for the Timorese masses, in whose name Australia has intervened, they have had no say in the arrangements whatsoever. All in all, the East Timor operation has provided a lesson in the modus operandi of the new “ethical” foreign policy proclaimed by the Western powers as the basis for their interventions. Under the pretext of a sudden concern for the lives and well-being of the refugees and the oppressed, a new colonialism has taken place, driven entirely by thrust for oil and gas revenues as well as other natural resources and strategic advantages. Six years after East Timor’s so-called “liberation”, 40 percent of the population still lives on 50 cents a day or less, life expectancy is just 40 years and maternal mortality rates are among the highest in the world.

Increasing dependence on Australia for food, safety, divided politically and with an economy in tatters, analyst believes that East Timor may be on a path to becoming a failed state. The siphoning off of the lion’s share of the region’s oil and gas wealth by Australia will perpetuate this suffering for many years to come.

Bangladesh should draw some lessons from the happenings in Timor Sea as we are yet to demarcate our maritime boundary with both Myanmar and India and claim sovereign rights over the gas and oil reserves spreading on an area of about 2,07,000 sq km in the Bay of Bengal.

The Daily Star (Bangladesh)

Saturday, September 8, 2007 12:43 AM

Strategic Issues: Australia siphoning off East Timor’s oil and gas reserves

Cdre Md Khurshed Alam ndc psc BN (Retd)

– The author is a free lancer.

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