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Time to draw the line between Australia and Timor Leste


Map portraying 2002 Joint Petroleum Development AreaAustralian governments of both political persuasions have continued to reassure the Australian public that they are decent and special when it comes to dealing with the Timorese over disagreements in the Timor Sea. Time for such special pleading is over. For the good of ongoing relations between these two unequal neighbours, it is time for Australia to commit to negotiating final maritime boundaries, especially if the Timorese and the oil companies working in the Timor Sea cannot reach agreement on the mode of gas production.

First a little history of a very complex issue. While East Timor was still under Portuguese control, Australia and Indonesia finalised their maritime boundaries in 1972. Indonesia accepted Australia's claim that the Australian continental shelf extended as far as the Timor Trough, resulting in a boundary close to the Indonesian coastline. Portugal never accepted Australia's argument, claiming instead that there were not two separate continental shelves and that the boundary should be a median line between Timor and Australia.

Indonesia invaded East Timor on 7 December 1975. By the time Indonesia and Australia sat down to discuss the unresolved maritime boundary off the coast of East Timor, Indonesia no longer accepted the Australian continental shelf argument. The UN Convention on the Law of the Sea (UNCLOS) had been finalised and it favoured the drawing of a median line. Not wanting to undo the 1972 agreement, Australia and Indonesia agreed to a mutual standoff, sharing any resources off the Timor coastline found between the Timor Trough and the median line.

Once East Timor gained its independence, Australia convinced the new Timorese government to maintain the previous approach of the Indonesians, leaving border negotiations on the long finger. Australia played hardball. On 24 November 2000, Australian officials were so brazen as to warn UN officials who were putting the case for a negotiated Australia-Timor boundary in accordance with recent developments in international law that Australia might opt out of UN judicial processes. The option had already been put to Cabinet and no minister had objected.

The UN officials were warned: 'The more ambitious East Timor's claim, the easier it would be for the Government to pursue this approach in terms of living down domestic controversy.' This was 'Australia's get out of jail card'. On 25 March 2002, Australia did just that. Foreign Minister Alexander Downer said that 'any maritime boundary dispute is best settled by negotiation rather than litigation'.

A joint venture led by Conoco Phillips commenced development of the Bayu Undan natural gas field just north of the median line. Both governments agreed to the joint venturers' proposal that the gas be piped to Darwin for processing. East Timor was to receive 90 per cent of the upstream revenue in taxes and royalties from any petroleum resources within the Joint Petroleum Development Area (JPDA).

On 20 May 2002, Timor Leste gained its independence. Prime Minister John Howard attended the celebrations. He and Prime Minister Mari Alkitiri had time to step aside and sign the Timor Sea Treaty giving effect to this arrangement.

On the northeast corner of the JPDA lies the Greater Sunrise deposit which lies 20 per cent within the JPDA and 80 per cent within Australian jurisdiction, 150km south-east of Timor-Leste and 450km north-west of Darwin. On 6 March 2003, the two governments signed a unitisation agreement (IUA) settling on the 20:80 split while once again leaving the issue of final boundary determination in abeyance.

To many Timorese, this deal seemed on its face unfair. While the deposit was three times as far from Australia as from East Timor, Australia was to receive more than four-fifths of the tax benefits. Most people's offended sense of fairness was not allayed by the claim that 80 per cent of the deposit was arguably closest to Indonesia and that Indonesia had given away its rights to Australia back in 1972. The Timorese government had received advice from highly regarded international lawyer Vaughan Lowe who argued that the boundary was highly contestable.

To be blunt, Timor wanted more money from the deal, and Australia wanted to put final boundary determination on the very long finger knowing that any such determination would involve Indonesia as well as Australia and East Timor. Timor's Foreign Minister Jose Ramos Horta proposed a compromise in an address to the Lowy Institute in Sydney on 29 November 2004. He then quite reasonably suggested that there should be recourse to the International Court of Justice when 'two friends and neighbours are not able to resolve' their dispute.

He contested Downer's claim that the matter could be resolved without any outside involvement: 'Well, it seems that we are not able to. So let's show good faith, faith in the legal multilateral bodies such as the ICJ, and jointly request mediation or arbitration. We are poor and in no hurry to become rich. We can wait. We are patient, proud people. We are not impressed by pressure or bullying tactics. We have self-respect and a sense of dignity.'

Another treaty, thought to be a win-win, was negotiated between the Howard Government and the Fretilin Government of East Timor led by Alkitiri. The Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS) signed on 12 January 2006 split the government revenues for Greater Sunrise 50:50 and put boundary negotiations on hold for 50 years provided that the Greater Sunrise project got the go-ahead. If agreement was not reached between the government regulators and joint venturers within six years, either government could call off all bets.

In April-May 2006, there was much instability and violence in Timor Leste culminating in the resignation of Alkitiri. Ramos Horta then took over as prime minister.

The CMATS Treaty was tabled in the Australian Parliament on the first sitting day of the year in 2007. On 22 February 2007, Downer wrote to the Australian Parliament's Joint Standing Committee on Treaties informing them of his decision to invoke the national interest exemption and proceed with binding treaty action for the CMATS Treaty without the usual 20 sitting days being permitted for the Committee to consider the matter:

Given the importance of the treaties to our interests in the Timor Sea as well as those of our close neighbour, East Timor, the Government would not wish to allow an opportunity to pass to finalise our agreed arrangements for the Timor Sea. It is uncertain when an opportunity would arise after the East Timorese elections period. I therefore consider that the CMATS Treaty action needs to be taken before the usual twenty sitting day period following tabling elapses.

The Committee was not pleased, noting:

The Committee's previous endorsement of the Sunrise IUA should not have been used to infer support for CMATS. 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.

Both parliaments gave approval of CMATS despite these reservations about process and political upheaval in Dili.

After the 2007 Timor election, Xanana Gusmao became prime minister. He was known to be a passionate advocate for the development of Sunrise onshore and to be committed to prompt boundary determination, being less conciliatory and forgiving of Australia's stand than was Ramos Horta. He was adamant that the joint venturers should submit a development plan for Sunrise with provision for onshore gas processing in Timor Leste.

The joint venturers, including Woodside and Shell, were unmoved, claiming that Timor processing of the gas was commercially less viable than the use of a floating facility (FLNG) and also less viable than processing in Darwin. On 29 April 2010, Woodside officially informed the Australian Stock Exchange that 'a floating LNG processing facility best satisfies the key development requirements outlined by the IUA'.

On 18 May, Woodside purported to deliver the development plan to the Timorese regulatory authority for approval. The Timorese threw the proposal back into Woodside's car as it sped away from a Dili meeting. All was not well.

Shell was adamant that FLNG was the only way to go with natural gas marine projects in this part of the world. They are now using this new technology for the Abadi project in Indonesian waters and for the Prelude project in Australian waters.

The Timor Government was unhappy with the lack of movement on Sunrise and the placing of border determinations on the ever long finger. On 7 December 2012, the anniversary of Indonesia's 1975 invasion of East Timor, Timorese Foreign Minister Jose Luis Guterres met with Prime Minister Julia Gillard in Canberra and presented a formal letter indicating dissatisfaction with CMATS.

Gillard and Guterres agreed not to engage in megaphone diplomacy. The Timorese had been going to institute the legal processes earlier but decided to wait until Australia secured its seat on the UN Security Council, an appointment strongly supported by Timor Leste which prides itself on being a friend of Australia. Foreign Minister Bob Carr visited Dili on 16 December 2012 but did not raise the issue.

Having long investigated their options, the Timorese obtained legal advice from two of the world's leading international lawyers, Sir Elihu Lauterpacht and Vaughan Lowe. On 7 February 2013, Bob Carr assured the Australian Senate: 'We have received no indication from Timor-Leste that would suggest CMATS would be terminated.' This assurance caused some surprise to those in the know in Dili.

Australia's previous Ambassador to Timor, Margaret Twomey, was sent as a special envoy to Dili. Just before he resigned from the ministry, Martin Ferguson who has always worked closely with Alfredo Pires, East Timor's Natural Resources Minister, came to Dili on 22 February 2013 assuring the Timorese about his availability for ongoing discussions about resource development in the Timor Sea. Then came the bombshell announcement — not from the Timorese who had remain silent as agreed, but from the Australians.

On 3 May, Foreign Minister Bob Carr and Attorney General Mark Dreyfus issued a joint press release saying:

Timor-Leste notified Australia on April 23 that it has initiated arbitration under the 2002 Timor Sea Treaty of a dispute related to the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS).

The arbitration relates to the validity of the CMATS treaty. Timor-Leste argues that CMATS is invalid because it alleges Australia did not conduct the CMATS negotiations in 2004 in good faith by engaging in espionage.

These allegations are not new and it has been the position of succ essive Australian Governments not to confirm or deny such allegations.

However, Australia has always conducted itself in a professional manner in diplomatic negotiations and conducted the CMATS treaty negotiations in good faith.

The political leadership in Timor Leste is losing patience with Australian claims to both decency and exceptionalism. On 20 May, Timor Leste will celebrate its 11th anniversary of independence. Their government leaders think it is now time to start the painstaking work of determining their maritime boundaries with Australia.

Australia's game of pleading exemption from UN determination processes while delaying two party negotiations for decades has run its course. Especially if the Sunrise joint venturers have no intention of processing gas onshore in Timor Leste, the Timorese deserve 'permanent certainty' about their maritime boundaries.

Mind you, no lawyer can confidently predict the outcome. But the long finger game is now generating more mistrust than room for negotiation. It's time to draw the line, seeking more legal and commercial certainty lest the gains from the resources under the sea be lost together with the friendship between good neighbours. The Timorese expect nothing more than that we Australians act decently and fairly while they consider the complex options for future resource development.

Frank Brennan headshotFr Frank Brennan SJ is professor of law, director of strategic research projects (social justice and ethics), Australian Catholic University, adjunct professor at the College of Law and the National Centre for Indigenous Studies, Australian National University. He travelled to Timor Leste last week at the invitation of the Government of Timor Leste to learn of their concerns. He wrote The Timor Sea's Oil and Gas: What's Fair (Australian Catholic Social Justice Council, 2004)

Topic tags: Frank Brennan, East Timor, Timor Leste



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Existing comments

Congratulations ES and Father Frank for this article. What a disappointment Bob Carr has turned out to be.

Jim Jones | 14 May 2013  

Finalising the deal might be good, but it is clear that East Timor keeps moving the goal posts and is not sticking to the treaties it has agreed to. Surely East Timor should keep its word.

Will Peters | 14 May 2013  

Thanks for a wonderfully informative piece, Frank. It seems to me that Australian governments should die of shame rather than fail in decency and fairness to Timor Leste.

Joe Castley | 14 May 2013  

As incisive and just as ever, Frank. Good on you. I think we need to be very careful in our dealings with Timor Leste that we don't come across as the national equivalent of the school bully.

Edward F | 14 May 2013  

The old story, politicians never have enough money. Too much of it is squandered. We as Australians should do the honorable thing and settle with those poor people, the Timorese. The oil companies always manage to get enough to record exorbitant profits. We have become a sad society.

Clem Schaper | 14 May 2013  

Well and truly said, Fr Brennan. I feel ashamed as an Australian that we have treated one of the poorest nations on earth so shabbily. The need in Timor-Leste is overwhelming and the rates of maternal, infant and child mortality exorbitant. The original treaty was signed with an invading and occupying power! Why would the Timorese not want to move goalposts to ensure that it is their country that benefits to the maximum.

Patricia R | 14 May 2013  

This article reveals that Australian leaders have not been acting in good faith. Howard withdrew Australia from UNCLOS to get a better deal in relation to the oil and gas in the Timor Sea - thereby shifting the goalposts so that the richest country in the region is ripping off the poorest. I hope Timor-Leste succeeds in its appeal. Australia has sold out the East Timorese on too many occasions.

Andrew (Andy) Alcock | 14 May 2013  

why does this not surprise me the Australian government are greedy and only pretend to care about others less fortunate.

irena mangone | 14 May 2013  

To correct an error, Mr Alcock, Australia remains a party to UNCLOS and has not withdrawn. Australia doesn't allow the court established by UNCLOS to decide maritime boundary disputes. But Australia is still bound by the rules created by UNCLOS. The Vaughn Lowe advice was written for a Portuguese oil company and not for East Timor. The company was trying to persuade East Timor to take Australia to court about maritime boundaries. Mr Lowe's position is at one extreme. A court would probably not accept Mr Lowe's advice completely. East Timor chose to negotiate the treaties and one of the most basic rules of international law is that states should abide by the treaties they enter into. Oh and Senator Carr told the truth. East Timor has not terminated the treaty. Alfredo Pires explained to ABC why not. Timor wants to keep one of the treaties because it is such a good deal for them.

Will Peters | 14 May 2013  

"The Timorese government had received advice from highly regarded international lawyer Vaughan Lowe who argued that the boundary was highly contestable." Comment: this is not strictly correct. The Lowe-Carlton legal opinion was procured by Oceanic Exploration who were attempting to reclaim their permit covering the entire Timor-gap area, to the median line. This opinion was presented at a seminar in Dili in March 2002, boycotted by Mr Alkatiri and the Timor (transitional) government. " Portugal never accepted Australia's argument, claiming instead that there were not two separate continental shelves and that the boundary should be a median line between Timor and Australia." Comment: this statement is half-true. The permit issued by the Portuguese parliament to Oceanic Exploration in 1994 extended to the median line, but the lateral boundaries were the same as the current joint development area lateral (north-south) boundaries. This means that Portugal recognized at that time Australia's position vis-a-vis the lateral maritime boundaries. "Mind you, no lawyer can confidently predict the outcome." Comment: This statement would appear to be very true, based on the above observations. The legal concept, that Lowe & Carlton warned about in March 2002, I recall was called "modus vivendi".

Geoff McKee | 14 May 2013  

Australia has no decency left if it ever had any. We sat on our hands while 200,000 of our neighbours in East Timor were slaughtered, then denied refuge to those who managed to flee, then wanted to dump other refugees there - both Howard and Gillard tried this on - and so long as we can steal what we can we will continue to abuse the brown people to the north. Like we do the people of PNG as Gillard signs illegal dirty deals to build illegal prisons on Manus to dump the nationals of other nations being kidnapped and trafficked by her racist government. Both major parties make me sick to my stomach, to both sides treaties and protocls are to be signed, we pat ourselves on the back and then throw them in the bin.

Marilyn | 14 May 2013  

"The permit issued by the Portuguese parliament to Oceanic Exploration in 1994" Correction: that should read 1974 It would appear that the key goal of the Timorese government would be to wrestle more control over the Greater Sunrise gas field so that they can influence the development plan in favor of onshore gas processing - rather than offshore floating gas processing (FLNG). The CMATS treaty is clearly seen in hindsight as a mistake and as an obstacle to that goal. Here is an hypothetical negotiated outcome that would enable the Timorese goals and the operator's goals to be mostly satisfied, with FLNG, and a slight compromise by both parties. See http://gamckee.com/wordpress/general/timor-sea/

Geoff | 14 May 2013  

It is correct that Vaughan Lowe's first opinion was for a company and not for the government of Timor Leste. However Vaughan Lowe and Sir Elihu Lauterpacht have since provided advice for the government of Timor Leste. Those Australians critical of Timor Leste for "moving the goal posts" ought concede the wisdom of Australia now committing to negotiating maritime boundaries and to allowing "the court established by UNCLOS to decide maritime boundary disputes". On the diversity of legal opinion, Paul Cleary's book makes clear that the advice from the late Ian Brownlie (another of the great luminaries in this field) was less favourable to the Timorese than Vaughan Lowe's original opinion. Thus my concluding statement that "no lawyer can confidently predict the outcome". Boundary delimitation of this sort is more an art than a science.

Frank Brennan SJ | 14 May 2013  

Thanks to FR.Brennan, this article help Timorese to understand what is going on with the negotiation in the Timor Sea.Australia ia a big and rich country should be fair to small and poor country such as Timor Leste. The resources is belong to Timor Leste therefore Timor Leste government should keep going on with median line boundry arbitrary and it´s our sovereign wealth we have the right to explore our resources with 100% revenue come to our country.

Da Cruz | 14 May 2013  

But Father Brennan, don't you think that a country which has signed and ratified three treaties ought to keep its word? Do you really think Australia ought to engage in negotiations again rather than expecting Timor to keep its word? And didn't you write previously that the equal split applied to the Sunrise resource is a fair outcome?

Will Peters | 14 May 2013  

According to Paul Cleary, an adviser to the East Timor government’s Timor Sea Office from 2003-5, Ian Brownlie was less than optimistic about East Timor’s prospects of arguing successfully for anything other than a line of equidistance giving full weight to the nearby small Indonesian islands. Giving only a 50% weighting to the Indonesian islands so that 100% of Greater Sunrise would then fall within Timor’s jurisdiction under determined maritime boundaries would require what Brownlie described as “an optimistic application of legal criteria”. In his book Shakedown, Cleary writes, “In essence, Brownlie recommended that East Timor pursue a strategy that would allow it to ‘keep its entitlements and keep the Treaty’. In other words, East Timor should go ahead with signing the [Timor Sea] Treaty [2002] while very firmly setting out that it was without prejudice to a final agreement on maritime boundaries. At the same time, East Timor should publicly urge Australia to commence permanent boundary negotiations.” Thus I have previously said that I think a 50:50 revenue share on Greater Sunrise is fair. And without a determination of maritime boundaries, I still think that. With a determination of maritime boundaries, I think the revenue share should follow the boundaries. That could mean more or less than 50% for Timor Leste. I think governments, like people, should keep their word and should act in good faith when negotiating treaties. I have no idea whether Australia engaged in unwarranted espionage. I hope it did not. If it did, I think East Timor is entitled to pursue any legal remedies which may be available.

Frank Brennan SJ | 14 May 2013  

Australia has signed and agreed to dozens of treaties and then throws them straight in the bin Will, we have no high moral ground.

Marilyn | 14 May 2013  

Congratulations Frank on such a comprehensive summary of the past four decades history of these seabed boundary negotiations. I recall that when the Indonesia-Australia seabed boundary treaty was signed in Canberra in December 1972, the AFR quoted Professor Mochtar (a future Indonesian Foreign Minister and then leader of their delegation) as saying "We were taken to the cleaners". It should also be noted that the Whitlam Government appointed Professor Eli Lauterpacht as Legal Adviser to the then Department of Foreign Affairs, so he is very familiar with the history of this protracted boundary dispute.

Peter Reid | 15 May 2013  

Well written , as Timor is a new Nation and as its history will unfold to the youth of Timor Leste , Australia will certainley be seen in a different light. Our nation owes Timor for saving the men of the 2/2nd and 2/4 commandos in 1942 . Your friends never forget you . I think Australian Goverments past and present have . Its their oil and gas not ours . Thank you Gerald Kenneally , son of the late John Patrick Paddy Kenneally , A man who loved the Timor and its people

gerald Kenneally | 15 May 2013  

Frank, thank you for the painstaking work of keeping us honest.Marie

S. Marie O'Connor sgs | 15 May 2013  

Will permanent maritime boundaries magically bring Sunrise gas ashore to Timor Leste for economic development? We all know that is the "main game" for Timor Leste. And it can conceivably happen through negotiation with Woodside Energy under the current treaty arrangements (see http://gamckee.com/wordpress/general/timor-sea/). Pushing for the negotiation of final maritime boundaries now - after the exhaustive process leading to the signing and ratification of the three treaties (TST, IUA, and CMATS) - seems to be a distraction that, despite good intentions, will not help poverty reduction in Timor Leste. East Timor signed a treaty (CMATS) wherein it promised not to raise the issue of maritime boundaries for 50 years. So what is going on now? CMATS is still in force, because it has not been terminated by either party. If Timor Leste wishes to raise the issue of maritime boundaries, they need to terminate CMATS. That is now permissalbe under Article 12, since a development plan has not been approved after six years. My guess is that their activating a dispute resolution clause on grounds of "espionage" is a sophisticated political mechanism aimed at securing dialog with the Australian federal government, in order to help resolve the Sunrise gas development impasse. Since economic devleopment of Timor Leste is in Australia's national interest, the federal government may be persuaded to favourably influence negotiations between Woodside and Timor Leste. That could be a wrong conclusion, but it certainly makes more sense than tearing up treaties.

GEOFF MCKEE | 16 May 2013  

If Australia were willing to resolve the maritime boundary in good faith, existing revenue-sharing treaties (which are "without prejudice" to a permanent maritime boundary) would not be in the way. Timor-Leste is concerned about more than just Greater Sunrise -- our struggle for independence is unfinished if the edges of our maritime territory are undefined. For information and updates, see http://www.laohamutuk.org/Oil/Boundary/CMATSindex.htm. International law and politics are always intertwined, especially when the larger, richer, stronger party refuses to submit to legal processes. La'o Hamutuk recently asked the Australian Parliament (http://www.laohamutuk.org/Oil/Boundary/2013/LHSubAustPNenquiry28Mar2013.pdf), "Timor-Leste has the same political and sovereign rights as larger, more affluent, older Australia. But history shows that our southern neighbour has repeatedly taken advantage – both during and after the Indonesian occupation – to usurp what is rightfully ours. ... We cannot understand why democratic Australia, which respects human rights and rule of law for its own citizens, is unwilling to apply those principles to its northern neighbour. Is Australia so afraid of a fair boundary settlement that you would rather be a bully than be a good international citizen? Why do you continue to exploit advantages you obtained during the shameful and bloody Indonesian occupation of our country?"

Charles Scheiner | 17 May 2013  

Mr Scheiner, you make the mistake of saying the resources are rightfully Timor's. They are not. They are located in an area where both countries have claims. Both countries negotiated treaties on how to resolve their claims. But Timor doesn't want to keep its word and has resorted to desperate tactics to try to get more than its share under the treaties. Would Timor get more than half of Sunrise? Would it get it all? Quite probably not.

Will Peters | 18 May 2013  

International Boundary Disputes and Unitization in E&P 2013 (13-14 March 2013, Bangkok) will be the leading forum for in-depth analysis of this highly-charged business critical issue. Uniting real-life field experience from across the Asia Pacific region, with the most successful global practices in border disputes, the event will showcase the latest strategies and case studies to allow operators to cost-effectively predict, manage and operate within contested regions. Call +65 6818 6344 Fax +65 6818 6343 Email ibdu@arcmediaglobal.com Visit www.arcmediaglobal.com/ibdu

Dia Jean | 12 July 2013  

Tonight on ABC 7.30, Mr Agio Pereira, Head of the Council of Ministers in Timor Leste spoke out about Australia’s bugging of their Cabinet room during negotiation of the CMATS Treaty. Janelle Saffin, Paul Cleary and I were also interviewed. See http://www.abc.net.au/7.30/content/2013/s3900429.htm

Frank Brennan SJ | 27 November 2013  

The questions I put is where does Australia's continental shelf end? Does international law accept that the continental shelf is part of Australia?

Greg | 08 December 2013  

The President of the International Court of Justice has now written to Prime Minister Tony Abbott about the claim by Timor Leste which will come before the court on 20 January. He has asked the Australian Government "to refrain from any act which might cause prejudice to the rights claimed by the Democratic Republic of Timor-Leste in the present proceedings.” See http://www.icj-cij.org/docket/files/156/17846.pdf

Frank Brennan SJ | 23 December 2013  

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