Without any media fanfare, Foreign Minister Julie Bishop published a statement on 9 January 2017 announcing that Australia and Timor Leste had agreed to terminate the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS).
This news is more welcome to the Timorese government than to the Australian government. But the uncertainty created by this Timorese win might in time impact more adversely on Timor than on Australia. Only time will tell.
The starting point of any moral and prudential assessment of the announcement must be an acknowledgment that the self-determining, sovereign government of Timor Leste has achieved its objective of forcing Australia to the table to negotiate maritime boundaries in the Timor Sea.
Australia had not always been the unwilling party when it came to the negotiation of maritime boundaries. Back in 2004, Australia was keen to commence the protracted negotiations, knowing that ultimately Australia and Timor would need to be joined by Indonesia at the table to finalise boundaries delimiting the maritime jurisdiction of all three countries in the Timor Sea.
In 2004, Timor was already reaping the benefits from the Bayu Undan oil and gas deposit which was being extracted north of the median line between Australia and Timor Leste. Under the 2002 Timor Sea Treaty, Timor was entitled to 90 per cent of the upstream revenue from any deposits within the Joint Petroleum Development Area (JPDA) covering the area in dispute between Australia and Timor.
Basically, Australia has continued to claim jurisdiction over the continental shelf up to the edge of the Timor Trough, while Timor (like Portugal, its colonial master in times past) has claimed jurisdiction over the area north of a median line between Australia and Timor.
The next major deposit to come on line after Bayu Undan was Greater Sunrise which straddles the eastern lateral line between the JPDA and the area clearly within Australia's jurisdiction.
Under the 2002 Treaty, Timor would have been eligible only for 18 per cent of the upstream revenue (90 per cent of 20 per cent) because 80 per cent of the Greater Sunrise deposit lay within the Australian jurisdiction if the eastern lateral line remained in place.
"Timor has, at least for the moment, taken a huge gamble."
It was the Timorese leaders, not the Australians, who proposed in 2004 that boundary negotiations be put on hold and that a more creative solution for the development of Greater Sunrise be found. The Timorese were confident that Sunrise could be developed promptly. The Timorese leaders were delighted when they convinced the Australians to agree to a 50-50 upstream revenue share for Sunrise. Also, the Timorese were given the exclusive right to manage the water column inside the JPDA which meant that they could issue fishing licences there.
The parties agreed to extend the delay in negotiation of a maritime boundary from 30 years to 50 years, thinking this would provide ample time for the exploitation of Sunrise and any other petro carbons discovered in the JPDA. Such a delay suited Australian officials, who were getting worried that the Indonesians might want to revisit their earlier boundary determinations which could look disadvantageous to Indonesia considering what the Timorese might manage to negotiate, given recent developments in the international law of boundary delimitations.
In January 2006, the Australian and Timorese governments signed CMATS but the violence and political disruption in Timor meant a one year delay on ratification by the Timor parliament and president. During 2006, Australia once again despatched peacekeepers to Timor at the request of the Timor government.
Despite the upheavals in Timor as well as the complexity of some of the provisions in CMATS, (including a novel proposal that some of the treaty provisions would be resurrected if mining occurred even after one of the parties had terminated the treaty), Australian Foreign Minister Alexander Downer insisted on Australian parliamentary approval of the treaty without the usual time allowed for scrutiny by the Joint Standing Committee on Treaties (JSCOT). In a very non-partisan stance, JSCOT reported:
'The CMATS Treaty contains new and important obligations and raises different issues which should have been subject to the usual process of scrutiny and review. In this instance the national interest exemption should not have been invoked before the Committee was given a reasonable opportunity to consider and report on the Treaty within the Government's timeframe.'
Things started to turn sour when the joint venturers for Sunrise informed both governments in 2010 that their preferred development options were FLNG (floating liquid natural gas) or piping the gas to Darwin for processing. The Timorese were hoping that the joint venturers could be convinced to pipe the gas to Timor across the Timor Trough so that industry might be developed on the south side of Timor. The joint venturers insisted that any development plan had to provide the 'best commercial advantage consistent with good oilfield practice'. They were adamant that a pipeline to Timor with subsequent processing in Timor was a third option, and never likely to be first.
"The Timorese will need to convince the Indonesians to give less weight to their own islands when it comes to drawing the lateral line. This could take many, many years. After all, Timor and Indonesia have not yet succeeded in finalising their land borders."
Being flush with funds from Bayu Undan, the Timor Government could by this time afford very good legal advisers, including Sir Michael Wood and Vaughan Lowe from the United Kingdom. They advised that if a boundary negotiation were complete, there was every chance that the whole of Greater Sunrise would fall within Timor's jurisdiction. Timor would then be able to dismiss the joint venturers who were unwilling to contemplate development in Timor and to enlist a developer sympathetic to Timor's nationalist development goals.
The significance of the 9 January announcement is that Timor has, at least for the moment, taken a huge gamble. Timor has forfeited the right to manage the water column inside the JPDA and it has agreed to a reduced share in the upstream Sunrise revenue from 50 per cent to 18 per cent should it be developed before the finalisation of maritime boundaries. Were the eastern lateral to remain where it presently is, Timor would then be entitled to no more than 20 per cent of the upstream revenue flow.
Timor's legal advisers are arguing that the eastern lateral should be drawn more favourably for Timor so that the whole of Sunrise then falls within Timor's jurisdiction. But here is the big risk. The present eastern lateral has been used in the past by Australia, Portugal and Indonesia — all claiming that a line of equidistance giving equal weight to all islands is appropriate. Before the Timorese come to negotiate the eastern lateral determining the exclusive economic zones of Australia and Timor, they will need to negotiate that first part of the eastern lateral determining the territorial seas and the contiguous zones of Timor and Indonesia. The Timorese will need to convince the Indonesians to give less weight to their own islands when it comes to drawing the lateral line. This could take many, many years. After all, Timor and Indonesia have not yet succeeded in finalising their land borders. And Indonesia has already indicated that it would prefer to finalise its maritime borders north of Timor involving only the two countries before they come to consider boundaries south of Timor which will require all three countries to be at the table.
I applaud the Timorese leaders for their persistence in scrapping CMATS. CMATS was a good deal at the time, but it had reached its use-by date once the Timorese lost interest in the development of Sunrise without the prospect of onshore development in Timor. From here the stakes are high. The Timorese may get the whole of Sunrise but then they will need to find a developer willing to incur the added cost and uncertainty of a pipeline across the Timor Trough and subsequent development in Timor. Then again, they may be left with only a 20 per cent share in any future Sunrise development rather than the 50 per cent presently on the table, and in the meantime, they will have lost the exclusive right to manage the water column inside the JPDA. For Timor, the prospective gains are astronomical; for Australia, they're peanuts. That's the ongoing tragedy of this long running battle between David and Goliath in the Timor Sea. The Timorese have had a win, but they could still lose, big time.
Frank Brennan is a Jesuit priest and professor of law at Australian Catholic University.
Comments should be short, respectful and on topic. Email is requested for identification purposes only.
17 January 2017
Thanks for the clarity Frank. From the map, as the crow flies, Greater Sunrise looks closer to Timor Leste though flying crows cannot be constituent of international law on Maritime boundaries. Australia needs to treat Timor Leste with justice if we proclaim ourselves to be subject to the rule of law and stop clinging to the outdated jurisdiction over the continental shelf up to the edge of the Timor Trough. Why is Australia fighting so hard for peanuts when we should be concentrating instead on recouping royalties from gas developments within our actual maritime boundaries where we are currently losing billions because unlike Qatar who insist on stringent royalty payments based on output we allow for development deductions to offset royalty payments. We undersell our natural resources then try and strongarm our neighbour and supporter in times of war, into foregoing their just claim which will make a huge difference to their prosperity. May Timor Leste succeed in its quest for the proceeds and possible industry from Greater Sunrise.
17 January 2017
It's complicated. With big, powerful neighbours like Australia and Indonesia it is heartening to see that Timor Leste has had a win, courtesy of a strong legal team. Of course, no victory is satisfying if neighbours can not resolve differences in a mature and forthright fashion. Timor Leste has a long way to go to attain the standard of living Australians take for granted. And they have an unpredictable and powerful neighbour in Indonesia. They can take heart that the high moral ground can be found, with honesty and persistence, in a rich seabed.
18 January 2017
Frank, thank you for this lucid explanation of the complexities surrounding resource ownership in the Timor Sea. Your explanation of the Indonesian dimension was especially helpful.
18 January 2017
A very complex issue with major implications for the people of Timor Leste and for Australia's credentials as a fair and trustworthy partner. We are in your debt, Frank, for your work in keeping Government and community informed of the facts and their implications.
18 January 2017
Thanks Frank. The thought that the split of Greater Sunrise revenue could in practice revert to the18/82 split is a worry. A November ReachTEL survey (http://timfo.org/new-blog-avenue/) of over 10,000 people found that only 17% opposed the drawing of a border according to current international practice. The Timor Sea Justice Campaign in Melbourne has mounted a petition (http://www.timorseajustice.com/) to the Foreign Minister on the subject of finalising the border.
Frank Brennan SJ
18 January 2017
Susan, it is of course heartening that 83% of Australians want to see the ‘drawing of a border according to current international practice’. According to current international practice, you would use a median line rather than the continental shelf. That much seems to be increasingly accepted. That was an issue with Bayu Undan. It’s not so much an issue with Greater Sunrise. If there is agreement to a median line, then there will be a need to draw an eastern lateral down to the median line. According to current international practice, that eastern lateral might ultimately be drawn giving full weight to all islands in the area resulting in Timor getting only 20% of Greater Sunrise. But then again, the eastern lateral might ultimately be drawn giving lesser weight to the smaller Indonesian islands, thereby giving Timor 100% of Greater Sunrise. Let’s not forget, if it were not for the long agreed boundary between Indonesia and Australia, we might be looking at a median line between Australia and Indonesia, as well as between Australia and Timor. In that case the dispute over Greater Sunrise would have been between Timor and Indonesia with Indonesia claiming 80% of Sunrise because it’s closer to Indonesia than to Timor. The Indonesians would have been very wary about agreeing to giving lesser weight to their islands, giving away Greater Sunrise in the process. ‘Current international practice’ has a long way to run. Fortunately the Timorese have first rate legal advisers. So I wish them well.
18 January 2017
As you rightly indicate Frank, wheels within wheels. I find it hard to strike the right balance between the need for fairness (where one risks being simplistic), and respecting the intricacies (where one risks people's eyes glazing over). I felt a bit relieved over the decision to terminate the CMATS Treaty, because it allows the focus to remain on the border issue, leaving other matters, like the spying, to one side. It is important to concentrate on fairness: to Timor, to Australia and to Indonesia. We dudded Indonesia with the 1972 border, but the Indonesians have not challenged it, as far as I know, so the implications of a median between Indonesia and Australia, and the effect on Timor-Leste is hypothetical, if interesting. Yes, there are good legal minds advising the Timorese, and there are good political minds here too, people who want to get this sorted. I just hope there will be enough of them to exert the required political will for a just outcome. I often say to people, "Can you imagine if Australia had to take another nation to court to get a border finalised? The angst! The talk-back radio! The speeches on fairness!"
19 January 2017
Yes we would all hate to see Timor-Leste win and then lose out. 1. To date the consistent, considered legal counsel advice is that the Greater Sunrise area sits mostly within Timor-Leste territory. 2. All parties knew that CMATS was not going anywhere and it was tainted from the outset with no one willing to look seriously at the three options; and 3. then fatally tainted by the alleged spying on the Timorese CMATS deliberations. 4. Going almost back to TORS means negotiations can be kick-started aided and abetted by the Compulsory Conciliation Commissioners. 5. There must now be understandings between the parties and among them and the Conciliators that we are not yet apprised of. 6. Indonesia is not so much of a concern as some seem to indicate as they and Australia made it clear where their entitlements (a now maligned word) were to the north and the south. That is settled. 7. The laterals west and east would be defined according to the practice and precedent of the law of the sea and again Timor-Leste's position or claim is legally superior, even with weighting across a range of possibilities.
19 January 2017
Thanks to you also Susan for all your work for Timor Leste and the notice of the petition which I have alerted others to. I suppose we should be grateful the disagreement doesn't include Indonesia since Indonesia could
claim 80% of Sunrise because it’s closer to Indonesia than to Timor despite that not being clear from the map but I will trust your intimate knowledge of the area. An article supporting Timor Leste's claims is also http://www.abc.net.au/news/2015-09-21/henriss-address-the-oil-injustice/6790978. and a reply from the department of Foreign and Trade is at the bottom with a link to the history of treaties http://dfat.gov.au/geo/timor-leste/Pages/australias-maritime-arrangements-with-timor-leste.aspx
including where Conciliation Vs Arbitration is at http://dfat.gov.au/geo/timor-leste/Documents/fact-sheet-conciliation-between-australia-and-timor-leste.pdf
and explaining that under conciliation the findings are not binding. How has Australia avoided arbitration but has this meant the dispute remains between the current two instead of including Indonesia (a silver lining)?
19 January 2017
Thanks Frank, for your studied article concerning this matter. It was difficult for a poorly informed person like me to totally absorb it. But as a person who has worked for a number of years with the East Timorese, including the Jesuits and the Bairo Pite Clinic, I have a question. After a brief referral to Timor Leste, you go on to use the reference Timor. Your map describes the western half of Timor as Indonesia. Does this 'half' of the Island of Timor, have an official name, or were you simply dealing with the interests of Indonesia and Timor Leste in total?
19 January 2017
While I hope the citizens of East Timor benefit from a favourable outcome in this dispute, I would point out two things. 1.) Infinitely more important than the acquisition of any specific natural resource is the basing of a politico/economic structure of a nation on the objective nature of man. Venezuela is fabulously endowed with oil, but its citizenry is now desperately impoverished, thanks to socialism - a result entirely unforseen by Philip Adams and his mates, who a few years back actually invited Hugo Chavez to Australia to advise us as to how run an economy! On the other hand, societies such as Hong Kong demonstrate that economic freedom and just institutions can enable human ingenuity to transcend any manner of resource poverty. Hong Kong has no oil resources and no fresh water. East Timor has a lot more of both. 2.) This article of Fr Brennan is obviously totally sympatico with Timor harnessing and using fossil fuel resources. Excellent! I have no problem with East Timor doing so ... but then, I'm a deplorable "denier"- to wit, someone who thinks there is no demonstrably catastrophic human-induced global warming going on ! But isn't global warming the "greatest moral crisis of our time", as Kevin Rudd put it to almost universal acclaim? What's a social justice warrior to think these days?
Andrew (Andy) Alcock
20 January 2017
Thank you Father Frank for pointing out the pitfalls that Timor-Leste faces on obtaining access to its resources in the Timor Sea.
We have to admit that the Howard Government in 2004 was intent on cheating T-L out of its resources. The UN Convention of the Law of the Sea (UNCLOS) is the international law covering maritime boundaries..
For nations that have less than 400 km distance between their respective coasts, like Australia and Timor-Leste, the midline is the maritime boundary.
The resources south of this line belong to Australia and those to the north belong to Timor-Leste.
Most of the resources being taken currently are from T-L's 1/2.
Many do not realise that in its dealing with its other neighbours - Indonesia, NZ, the Solomons, PNG, New Caledonia, and the Kergeluen islands- Australia accepts the UNCLOS principle. Why not for the poorest nation in the region?
The East Timorese suffered greatly during World War 2 and the 24 year Indonesian occupation. Their suffering during WW2 was for supporting Australia and we contributed to their suffering during the occupation.
Australians of goodwill must put pressure on our leaders to respect international law and to give justice to our valiant WW2 allies.
Frank Brennan SJ
24 January 2017
EXTRACTS FROM TODAY’s JOINT STATEMENT BY THE GOVERNMENTS OF TIMOR-LESTE AND AUSTRALIA AND THE CONCILIATION COMMISSION CONSTITUTED PURSUANT TO ANNEX V OF THE UNITED NATIONS CONVENTION ON THE LAW OF THE SEA:
Timor-Leste and Australia have ‘reaffirmed their commitment to work in good faith towards an agreement on maritime boundaries by the end of the conciliation process in September 2017.’
Last Friday, ‘Timor-Leste wrote to the tribunals in the two arbitrations it had initiated with Australia under the Timor Sea Treaty in order to withdraw its claims. These arbitrations had previously been suspended by agreement of the two governments following the Commission’s meeting with the Parties in October 2016. The withdrawal of these arbitrations was the last step in the integrated package of confidence-building measures agreed during the Commission’s meetings with the Parties in October 2016.
‘The Commission and the Parties recognise the importance of providing stability and certainty for petroleum companies with current rights in the Timor Sea. The Parties are committed to providing a stable framework for existing petroleum operations. They have agreed that the 2002 Timor Sea Treaty and its supporting regulatory framework will remain in force between them in its original form until a final delimitation of maritime boundaries has come into effect.’
Frank Brennan SJ
25 January 2017
I have received ongoing queries about the Timor Sea dispute.
I think Timor-Leste is entitled to those resources north of a median line and west of an appropriate eastern lateral line. If the eastern lateral were simply to be a line of equidistance giving full weight to all islands, then Timor-Leste would be entitled to only 20% of Sunrise. If the eastern lateral were to be drawn giving lesser weight to some of the smaller Indonesian islands, then Timor-Leste would be entitled to more, and perhaps the whole, of Sunrise. What's the appropriate eastern lateral? I don't know. That will be a matter for negotiation between the parties, and one of those parties will be Indonesia because the laterals (east and west) will be used to divide the territorial seas and the contiguous zones of Timor-Leste and Indonesia.
It's complex. I'm very pleased Timor-Leste has had a win, insisting that negotiations commence. They have the assistance of the international commission until September. I respect those advocates who say Timor-Leste should get the whole of Sunrise. But if it is to be decided by a determination of maritime boundaries we will have to wait to see what the parties come up with.
I don't think you can argue that Timor-Leste should get the whole of Sunrise because it is the poorer party. If it should get the whole of Sunrise, it should be because the relevant boundary drawn according to the relevant criteria yields that result. The lawyers for Timor-Leste (who are absolutely first rate) think they have a good case. I have no doubt that the lawyers for Australia and for Indonesia will also think their clients have a good case for keeping the eastern lateral as a strict line of equidistance as used in the past by Portugal, Indonesia and Australia.
Frank Brennan SJ
30 January 2017
I was interviewed this morning on 3RRR in relation to developments in the Timor Sea. It commences at 47:36 and runs to 1:04:00. Listen at http://m.rrr.org.au/grid/20170130094736
03 February 2017
Thanks for notice of radio slot but had to go to (http://www.rrr.org.au/program/the-grapevine?an_page=2017-01-30) to access the program and scroll to 47:36...thank goodness you put the times in! Anyway, not likely by September this year you think. Does that mean possible developers of Greater sunrise will walk away or is it considered sufficiently plentiful to endure the wait and be prepared to invest in developing the southern part of Timor Leste if it should get the whole of Sunrise according to international law?
08 February 2017
Frank Brennan's excellent article highlights the need for Australians to put pressure on their Government to do the right thing. Doing so is not (just) helping Timor-Leste because we are rich and they are poor. Apart from the brave and skillful work of our defence and police, the Australian Government has repeatedly behaved shamefully towards a neighbour needing our help. From the Indonesian invasion to the signing of the Gap treaty to Downer's bully-boy tactics, the record is an embarrassing disgrace. It's time for an Australian Government to act with self-respect, vision and integrity.