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East Timor News Digest 3 – March 1-31, 2018

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Timor Sea dispute

Woodside's Sunrise LNG project could be left behind as East Timor looks

West Australian - March 25, 2018

Peter Milne – The Woodside Petroleum-led Sunrise LNG project is in danger of getting left behind despite a recent breakthrough in maritime border talks, as East Timor pursues other gas fields to launch its LNG industry.

WestBusiness understands an international company with oil and gas experience is preparing to fund the re-use of the Bayu Undan offshore facilities to extract gas left in that field and three others to supply an East Timorese LNG plant. The fields lie in the waters of both Australia and East Timor.

A source familiar with the plans said small modular LNG trains would be added as fields are developed. A new facility was being considered if access to the Bayu Undan facilities could not be agreed.

A continuing stand-off over how Sunrise is developed has firmed East Timorese resolve to find other avenues to replicate Papua New Guinea's success in developing an LNG industry.

It comes as Sunrise operator Woodside's options are narrowed by rival field Barossa Caldita getting ahead in the race to backfill the Darwin LNG plant and a floating LNG option being shelved.

The Bayu Undan field, which has supplied much-needed cash to East Timor since 2006, will not have enough gas for the Darwin LNG plant by 2022 or 2023.

Woodside wanted Sunrise, discovered in 1974, to backfill the 3.7 million tonnes-a-year Darwin plant. However, East Timor has continued to push for a Sunrise LNG plant on its south coast.

The Conciliation Commission, which finalised the maritime border negotiation this month, failed to break the impasse on Sunrise, which straddles the waters of both countries.

The technical feasibility of laying a pipeline through 3000m-deep waters to East Timor was accepted by the commission's oil and gas expert, but the option was considered uneconomic.

Even if East Timor agreed to Woodside's plans, Sunrise is no longer in the lead position to supply Darwin LNG. Barossa Caldita received initial approval from the offshore regulator NOPSEMA last week.

Front-end engineering for the project, understood to have an eventual cost of about $5 billion, is scheduled to start next quarter. It could supply Darwin LNG for up to 25 years.

ConocoPhillips operates and owns 57 per cent of Darwin LNG, operates Barossa Caldita (37.5 per cent ownership) and holds 30 per cent of Sunrise.

It is understood there was friction in the Barossa Caldita joint venture late last year when other participants discovered ConocoPhillips was involved in the border negotiations without their knowledge.

A ConocoPhillips spokesman said it had been invited to take part as Bayu Undan operator because boundary changes could affect the field. "It is common in the industry to have multiple roles – we have robust processes in place to manage this," he said.

Another concern from industry players has been the independence of the commission and the Australian Government in the decision to send Sunrise gas to East Timor or Darwin.

Canberra offered $100 million towards a small gas pipeline to East Timor for domestic use if the bulk of the gas went to Darwin for LNG. There would be no contribution if the LNG plant was built in East Timor.

A Department of Foreign Affairs and Trade spokeswoman said Australia was neutral about where Sunrise gas was processed, and the contribution was at the request of the commission. The future of Sunrise is unclear if Barossa Caldita secures the capacity at the single-train Darwin LNG plant.

It is understood Woodside has not ruled out any development concept but is not progressing FLNG. Sending the gas to a new second LNG train at Darwin would be far less attractive economically than using the existing train.

A Sunrise joint venture spokeswoman said the venture remained committed to developing Sunrise.

Indonesia is the third national player in the gas-rich Bonaparte Basin, with the giant Inpex-operated Abadi field north of Barossa. Industry consultant Wood Mackenzie estimates it to have 22 trillion cubic feet of gas of recoverable reserves, more than four times the size of Sunrise.

Floating LNG was considered but dropped when the Indonesian Government ordered an onshore development in 2016.

Source: https://thewest.com.au/business/oil-gas/woodsides-sunrise-lng-project-could-be-left-behind-as-east-timor-looks-elsewhere-ng-b88780136z

Jose Ramos-Horta urges Australia to return passport of spy who revealed bugging

The Guardian - March 22, 2018

Helen Davidson and Christopher Knaus – The Australian government should return the passport of a former secret service agent who blew the whistle on an operation to spy on Timor-Leste, Jose Ramos-Horta has said.

The comments from the former prime minister and president of Timor-Leste come just weeks after the two countries came to an historic maritime border agreement, after decades of fractious and controversial negotiations.

But despite the diplomatic resolution Witness K, who played a key role in the saga, continues to be "under effective house arrest" with no passport, his lawyer said.

"I think the Australian government should show wisdom and magnanimity to Witness K, whose honesty and courage led to the historic signing of the permanent maritime border agreement, by returning his passport," Ramos Horta told the Guardian.

Witness K, a former Australian Secret Intelligence Service agent, was involved in an illegal spy mission targeting the Timor-Leste cabinet in 2004. Australia used listening devices to gain the upper hand during sensitive bilateral negotiations over the splitting up of valuable oil and gas reserves in the Timor Sea.

Witness K turned whistleblower, publicly revealing the operation – a move that prompted Timor-Leste to challenge the agreement in The Hague.

Both Witness K and his lawyer, Bernard Collaery, were raided by Australian authorities in 2013, as Witness K prepared to give evidence in the Hague. Witness K had his passport seized and was left unable to travel to the court. The passport still has not been returned and Collaery alleges Witness K is now under "effective house arrest"and unable to leave Australia.

A spokesman for the Department of Foreign Affairs and Trade said the department would not comment because the decision to refuse Witness K a passport was before the administrative appeals tribunal.

Earlier this month, Timor-Leste and Australia struck a maritime border deal, which formally split up entitlement and ownership of the Timor Sea, including the untapped $53bn of gas reserves in the Greater Sunrise basin.

Collaery said the agreement would never have been reached without Witness K. Yet, he said, the spy is still treated in a "disgraceful" fashion by the Australian government.

"The misconduct towards Timor-Leste would never have been disclosed and negotiations reopened without the courage of Witness K," Collaery told Guardian Australia. "The people of Timor owe a massive debt to Witness K."

Source: https://www.theguardian.com/world/2018/mar/22/jose-ramos-horta-urges-australia-to-return-passport-of-spy-who-revealed-bugging-operation

Timor-Leste gives Xanana Gusmao hero's welcome

UCA News - March 12, 2018

Jose Belo, Dili – Timor-Leste's former president and prime minister Xanana Gusmao returned home in triumph on March 11 with a new maritime treaty with Australia, but warned the battle to win a favorable oil and gas deal with the country's giant neighbor remained far from over.

Gusmao, who left Timor-Leste as head of the country's negotiating team back in September, signed a deal on a maritime boundary with Australia in New York on March 6. It ended a longstanding dispute over rights to oil and gas reserves in the Timor Sea.

The treaty gives Asia's most Catholic country – and one of its poorest – the lion's share of future revenue from the Greater Sunrise oil and gas field, worth an estimated US$53 billion.

Gusmao was greeted by several ministers at the airport and by cheering crowds, thousands of whom lined the streets to the capital Dili, shouting "Viva Xanana Gusmao."

Speaking later in Dili, Gusmao thanked the crowd for the welcome and said most of the credit belonged to his negotiating team.

"I have to confess here that my role in this process was very little. For me more importantly we have to thank our lawyers and all the team members defending our rights."

However, he said another battle had to be won if the country was to reap the full benefits from the oil and gas reserves.

Ongoing negotiations between the two countries and the energy syndicate of Australia's Woodside, American energy firm ConocoPhillips and Royal Dutch Shell remain in the balance over whether the gas or oil will be processed in Darwin or on the south coast of Timor-Leste, where a new energy hub is being developed.

If that happens in Darwin, Timor-Leste will get 80 percent of the revenues but if in Timor, only 70 percent.

Dili wants the pipeline to go to its energy hub and envisions it will create many jobs and potentially generate tens of billions of dollars in development which would in turn spur better education and health care, as well as improve national infrastructure.

"Our war is not over yet so we have to continue our struggle because we will not allow anyone to take our wealth from us," he said.

"We have achieved an important victory but we will continue to fight for the deal that still remains on the table [a pipeline to the country's south coast]. I am confident that all Timorese will keep praying to our God Almighty to help us," he said.

Last week he accused Australia, the U.N. and energy companies of colluding to have oil and gas processed in Darwin in scathing letter to the U.N.-backed Conciliation Commission.

"The commission instead opted for the easiest way out, which is a shame as in my perception it reveals a lack of impartiality on your behalf!" Gusmao's letter said. "Australia's offer may appear generous [but]... it amounts to around a week's worth of revenue," he wrote.

The issue could become a major election issue in the upcoming May 10 national poll. Gusmao is expected to lead the opposition campaigning against the minority government led by his long-time rival Mari Alkatiri.

Source: https://www.ucanews.com/news/timor-leste-gives-xanana-gusmao-heros-welcome/81761

Gas profits and China fears drive Australia-Timor boundary treaty

World Socialist Website - March 13, 2018

Mike Head – Acrimonious disputes are continuing between the governments of Australia and the tiny neighouring state of East Timor despite last week's signing at the UN in New York of what the media misleadingly called an "historic" maritime boundary treaty covering the oil- and gas-rich Timor Sea.

Continuing its decades of betraying and bullying the impoverished territory's people, the Australian government is still insisting that the billions of dollars' worth of gas beneath the sea be pipelined to Australia's northern city of Darwin, rather than to East Timor.

Finalised after year-long negotiations at the Permanent Court of Arbitration in The Hague, the treaty essentially concedes that the undersea boundary should be set at halfway point between the two countries, in line with international law, thus placing most of the vast untapped gas reserves within East Timor's territory.

Nevertheless, the Australian government and the transnational energy giants that control the gas fields remain adamant that the mini-state on the eastern half of Timor cannot have the gas processing operations, and all the associated profits.

After more than 15 years of illegally denying Timorese sovereignty in the disputed zone, two inter-related factors – geo-strategic calculations and corporate profits – drove the Australian government to sign the treaty.

First and foremost were concerns in both Canberra and Washington that Australia's refusal to abide by the UN Convention on the Law of the Sea (UNCLOS) in settling the Timor border was opening the door for China to acquire greater influence in East Timor and the Asia-Pacific region.

As the Chinese economy has grown rapidly over the past two decades, Chinese agencies and companies have been increasingly active in East Timor, as throughout the region, funding infrastructure and establishing business operations.

In recent years, China has constructed office buildings for Timor's foreign and defence ministries and Defence Force, as well as the presidential palace. More than a thousand East Timorese civil servants have gone to China for training, Chinese naval vessels have twice visited Timor and the country has acquired several Chinese patrol boats.

More significantly, Beijing has politically exploited Australia's defiance of UNCLOS to undercut the denunciations from Washington and Canberra of China's refusal to recognise a US-orchestrated international tribunal ruling in 2016 rejecting China's territorial claims in the South China Sea.

Following that ruling, China's state-run Global Times directly attacked Australia's hypocrisy in an opinion piece, accusing it of "exempting itself from the very conventions it cites in denouncing other nations' supposed violations of 'international law'."

Notably, the US State Department immediately hailed this week's treaty signing, pointing to pressure from Washington for Australia to end the boundary dispute. Welcoming the adherence to UNCLOS, the department called the Timor treaty "a testament to the efficacy and importance of resolving disputes peacefully and in accordance with international law."

Echoing that language, in signing the pact at the UN, Australian Foreign Minister Julie Bishop said: "This treaty represents the importance of rules and the benefits of all states abiding by the rules... It is an example to all of how international rules-based order serves our interests."

As Bishop acknowledged, this "rules-based" order serves definite imperialist interests. In reality, the Timorese government was under enormous political and economic pressure to conclude the treaty, after years of predatory manoeuvres by the Australian ruling class and the corporate gas giants.

Currently, the Timorese state depends for 90 percent of its revenue on the Bayu-Undan gas field, which will be exhausted within four years. As an Australian Financial Review article observed: "Timor-Leste risks going over a financial cliff when the money runs out from the Bayu-Undan field in 2022 and its petroleum fund five years after that."

The boundary dispute had blocked any commencement on the much larger Greater Sunrise oil and gas field, with an estimated value of $50 billion. The Timorese ruling elite, facing widespread discontent over the population's poor living and social conditions, desperately needs construction on this project to start immediately.

Even now, the consortium that holds the rights over Greater Sunrise – featuring Australian-based operator Woodside Petroleum and its major partners Shell and ConocoPhillips – is refusing to proceed with the project until East Timor's demand for onshore processing is overruled. Consortium members issued statements expressing "disappointment" that the treaty failed to adopt its favoured option of a floating LNG plant.

Under the treaty, Timor will get 80 percent of the royalties from Greater Sunrise if the gas is piped to Darwin, but only 70 percent if the processing occurs in Timor. A leaked letter from Timorese leader Xanana Gusmao, who led the country's negotiations, has accused Australia of colluding with the oil corporations to prevent a Timorese pipeline.

According to the Australian Financial Review, backroom discussions are taking place on either having teams for offshore platforms fly out from Timor rather than Australia, or allowing Timorese workers to be brought to Darwin to work in a processing facility, under a cheap labour scheme similar to Australia's Pacific Islander seasonal workers program.

The treaty also blocks Timor from seeking compensation for the estimated $5 billion worth of taxes and royalties wrongly obtained by Australia since the Timor Sea gas fields began to be exploited in 1999.

These developments again underscore the fraud of all the claims that Australia intervened militarily in Timor in 1998 to protect its people from Indonesian repression and guarantee "independence."

Ever since the Whitlam Labor government recognised the Indonesian annexation of the former Portuguese colonial outpost in 1975, the Australian ruling class has been preoccupied only with securing the lion's share of the undersea resources and keeping a grip over the half island, strategically located at the eastern end of the Indonesian archipelago.

The now-officially abandoned "Timor Gap" boundary, so favourable to Australian capitalism, was originally drawn between the Hawke Labor government and General Suharto's Indonesian military junta in 1989, in return for Australia's continued support for Indonesian rule over East Timor.

Once Suharto's regime collapsed and his successor, B. J. Habibie, agreed to a plebiscite on Timorese separation, Australia intervened to ensure that any resulting statelet was subordinated to its corporate and strategic interests. What followed was relentless brow-beating, intimidation and dirty tricks by successive Australian governments, both Labor and Liberal-National, to maintain that domination.

In 2004, these machinations included the illegal bugging of Timor's cabinet room during previous bitter talks over the Timor Sea resources. That electronic eaves-dropping was exposed in 2013 by a whistle-blower from the Australian Secret Intelligence Service, known only as Witness K, who was involved in the operation. Foreign Minister Bishop refused to issue Witness K a passport, blocking him from testifying in The Hague against Australia.

Following the signing of the treaty, many issues remain unresolved, including the exact eastern and western boundaries of the new demarcation line between Australia and Timor. The renegotiation of the Timorese border could also trigger an Indonesian attempt to force an adjustment of its adjacent unfavourable border with Australia.

Despite the potential further loss of territory, however, Australia's ruling establishment has felt compelled to cut a deal with the Timorese leadership, which has provided the essential strategic and military backing for Australian imperialism's plundering activities throughout the region since World War II.

Australia is under enormous pressure from the US to line up fully with Washington against Beijing on key flashpoints such as the South China Sea. The Trump administration's National Defense Strategy in January named China as a "strategic competitor" seeking "Indo-Pacific regional hegemony in the near-term and displacement of the United States to achieve global pre-eminence in the future." The US military build-up throughout the region is to ensure continued American dominance through war with China if necessary.

Source: http://www.wsws.org/en/articles/2018/03/13/timo-m13.html

Woodside's Sunrise stalled in Timor deal

West Australian - March 8, 2018

Peter Milne – Woodside's Sunrise LNG project remains stalled as East Timor slams negotiations to agree on a development concept and dismisses incentives to send the gas to Darwin that include a share of the project and $US300 million towards a gas pipeline to the impoverished nation.

A maritime border treaty between Australia and East Timor was signed in New York yesterday without the planned agreement on how to develop Sunrise, which lies in the long-disputed waters.

To settle the border dispute, East Timor in 2016 called for a compulsory negotiation under the UN Law of the Sea. Last August the two countries decided to agree to the Sunrise development concept by February.

With no agreement, the conciliation commission that ran the negotiations yesterday published an assessment of the options favoured by either side.

East Timor wants gas from the Sunrise field, first discovered in 1974, piped to an LNG plant built on its southern coast. The Sunrise joint venture's concept is to send the gas to the existing Bayu-Undan pipeline and on to the Darwin LNG plant.

Sunrise offered East Timor many incentives to choose Darwin. They included 3 per cent of the offshore project and 0.9 per cent of the Darwin LNG project free, $US200 million towards a gas pipeline to East Timor for local use and basing the offshore operations there. The Australian Government offered an extra $US100 million towards the pipeline.

The commission said it did not wish to recommend a concept, but that based on the assessment East Timor would have to subsidise the cost of building an LNG plant in its country by $US5.6 billion.

East Timor chief negotiator and former president Xanana Gusmao, in a letter to the commissioners leaked to the ABC, said the commission was not impartial and the "superficial" assessment had focused on building up the Darwin LNG concept, not treating both options equally.

He said Australia's promised contribution to the pipeline appeared to be an unjustified payment to secure an unfair business advantage for the Sunrise and Darwin LNG joint ventures.

A Woodside spokeswoman said it was disappointing the conciliation process did not result in an agreed development concept. Woodside plans to develop Sunrise after 2026.

Source: https://thewest.com.au/business/oil-gas/woodsides-sunrise-stalled-in-timor-deal-ng-b88766709z

Treaty confirms Australia profited from Timor-Leste oil and gas, rights groups

The Guardian - March 7, 2018

Helen Davidson and Christopher Knaus – Australia has received billions of dollars in revenue from contested oil and gas fields which a new border treaty officially confirms belonged to Timor-Leste, civil society groups have claimed.

On Wednesday the two nations signed a treaty agreeing a permanent maritime border to close the Timor Gap, and establishing a "special regime" area for the sharing of an untapped, multibillion-dollar gas field in the Timor Sea.

It came at the end of decades of fractious negotiations and disagreements, which included accusations of greed and espionage on the part of Australia.

But human rights groups and observers have balked at the treaty's division of rights and revenue entitlements to Australia which they say belong to Timor-Leste, and at provisions which stop Timor-Leste seeking compensation.

The treaty delimits a permanent north-south border, and two transitional borders on the east and west.

The eastern transitional border divides Greater Sunrise, and on the west three fields – Buffalo, Bayu Undan and Kitan – are now fully in Timorese territory. The nearly-depleted Laminaria-Corallina remains in Australian waters but could shift.

The treaty suggests the transitional borders will move once Greater Sunrise on the west and Laminaria-Corallina on the east are depleted, and once Timor and Indonesia agree to new borders. What agreement those two nations come to will determine the ownership of the then-depleted fields.

However, the agreement signed at the United Nations on Wednesday stipulates "no compensation for past exploitation".

L'ao Hamutuk, a Timorese human rights group, published calculations claiming Laminaria-Corallina has produced 203m barrels of oil since it began production in 1999, with more than US$2.2bn in tax paid to the Australian government. It estimates Australia received another $2.4bn in revenue from the other fields.

A Timorese diplomatic source told the Guardian it was unlikely Timor-Leste wanted to push for compensation, because of Australia's generosity during "difficult times".

"Because Australia has been so generous with Timor in the past, they will probably not ask for it back, but if Australia wanted to give it to Timor, then that would be nice."

Spokesman for the Timor Sea Justice Campaign, Tom Clarke, said Australian governments had tried to "short-change the Timorese at every opportunity over the years" and he welcomed the lasting solution found on the boundaries.

"[A] question is will Australia be paying back any revenue it received from smaller fields such as Buffalo when it was unilaterally depleting contested fields that the Timorese have always claimed as theirs?"

"Australia owes Timor billions," said Kim McGrath, research director of the Steve Bracks AC Timor-Leste Governance Project and an adviser to the Timor-Leste government.

McGrath said Australia had come a long way in working with Timor-Leste, and while she was initially skeptical they would "come to the party" in the untested conciliation process, she had been proved wrong.

"While I'm not convinced Australia is fair or right, and certainly I'd question the morality of Australia still grabbing a piece of Greater Sunrise, it's still a step forward."

McGrath said a 2015 decision by the Australian Labor party to officially support negotiations was a "game changer" as it forced the foreign affairs department to prepare for it in the event Labor won the 2016 election.

Bernard Collaery, a lawyer intimately involved in the case, described the treaty as "more of the same" and said a median line boundary was "no victory at all".

It was something Timor-Leste had already been entitled to under United Nations law of the sea convention since Australia signed it, Collaery said.

"Australia has been a pickpocket in the Timor Sea, shuffling through the poverty-stricken garments of these people for years," Collaery told Guardian Australia. "And it's horrible."

Collaery said former Timor-Leste president Xanana Gusmao, a close friend of his, was "between a rock and a hard place" with his people, and "the next generation of Timorese may not be as tolerant as he's been".

Professor Clive Schofield, from Woollongong University's National Centre for Ocean Resources and Security, disagreed with assessments that a fairly drawn median line would place Greater Sunrise wholly in Timor-Leste territory.

He said the border shifts in the lateral boundaries enshrined in the treaty were "quite innovative" in that they appeared to anticipate the outcome of Timorese-Indonesian negotiations over their borders on either side of the Timor Gap.

"Those arguments around the idea that Timor-Leste's lateral lines should be much further to the east and west rely on giving less weight to Indonesian territory," he said.

Once the treaty is enacted into domestic law the two countries will continue negotiations about how to split and develop Greater Sunrise.

A letter from Gusmao to the UN conciliation committee, leaked on Tuesday, accused Australia of colluding with resource companies in pushing for the gas to be piped to Darwin.

He said giving up 10% of the revenue share in return for a Timorese processing plant would bring about $25bn in downstream revenue to his country.

Source: https://www.theguardian.com/world/2018/mar/07/treaty-confirms-australia-profited-from-timor-leste-oil-and-gas-rights-groups-say

Australian spy who revealed bugging of Timor-Leste cabinet under 'effective

The Guardian - March 7, 2018

Christopher Knaus – The spy who blew the whistle on Australia's bugging of Timor-Leste's cabinet room during sensitive oil and gas negotiations is still under "effective house arrest" and has been treated disgracefully by Australia in retaliation for his actions, his lawyer says.

The Australian secret intelligence service agent, known only as Witness K, had his passport seized in 2013 as he prepared to give evidence in The Hague on an Australian bugging operation.

In 2004, Witness K was involved in a covert mission to listen in on the Timor-Leste cabinet aimed at giving Australia the upper hand during negotiations to carve up oil and gas reserves in the Timor Sea, estimated to be worth about $53bn.

The revelations caused Timor-Leste to launch legal action at The Hague, saying Australia's espionage voided a John Howard-era agreement on sharing the reserves.

Witness K's passport was taken at the same time as authorities raided the Canberra home of his lawyer, Bernard Collaery, seizing a cache of documents.

Witness K has since launched action in the security division of the administrative appeals tribunal to have his passport handed back. The proceedings have been resisted by the Australian government, which still describes him as a security risk.

On Wednesday, as Australian and Timor-Leste signed a new agreement about sharing the reserves, Collaery spoke out about the continued "disgraceful" treatment of Witness K.

"The refusal of a passport to witness K long after the director-general of Asio cleared him for a passport is pure retaliation," Collaery told Guardian Australia. "It is unbecoming our nation to treat a loyal veteran, a patriot [in this way].

"It's pure retaliation, the appeal procedures have been going for four years. It is disgraceful. The cover-up continues."

Were it not for Witness K, Collaery said, the misconduct towards Timor-Leste would "never have been disclosed".

Source: https://www.theguardian.com/world/2018/mar/07/australian-spy-who-revealed-bugging-of-timor-leste-cabinet-under-effective-house-arrest

East Timor accuses Australia of colluding with companies over Greater Sunrise

ABC Radio Australia - March 6, 2018

Peter Lloyd – East Timor's chief negotiator Xanana Gusmao has accused Australia of essentially colluding with oil companies to ensure Greater Sunrise oil and gas gets piped to Darwin instead of East Timor.

In a letter to the United Nations Conciliation Commission, obtained by PM, Mr Gusmao, who was previously the prime minister and president of East Timor, excoriated both Australia and the process before the UN commission.

"The Commission instead opted for the easiest way out, which is a shame as in my perception it reveals a lack of impartiality on your behalf!"

Australia and East Timor will sign a treaty in New York tomorrow to confirm the first maritime boundary between the countries.

The ABC can confirm the treaty places the border in the position advocated by East Timor halfway between the two countries.

But they have failed to agree on how to develop the vast Greater Sunrise oil fields, with deposits worth an estimated $50 billion.

There is a deep sense of disquiet in Dili over the treaty conditions imposed by Australia.

Australia is proposing a split of 80/20 in favour of the Timorese if the oil and gas is processed in Darwin.

That is a deal-breaker for East Timor, which says it will take a 70/30 split if the oil and gas comes to East Timor.

Dili says oil and gas is only of great value to the country if it is processed there.

There are many downstream advantages and economic growth that come with having processing take place on the south coast of East Timor, where a "petroleum hub" has been developed with the expectation of creating hundreds of jobs and potentially tens of billions of dollars in development, as well as education, health, infrastructure and knowledge transfer.

"Australia's offer may appear generous [but]... it amounts to around a week's worth of revenue," Mr Gusmao wrote.

East Timor says if the processing takes place in Darwin, there is potentially a downstream benefit to Australia of $25 billion, which it says should rightly go to East Timor, for the development of the country.

East Timor has accused Australia of colluding with companies Woodside Petroleum and Conoco Philips to put forward this proposal.

It has also criticised the Conciliation Commission, saying the technical experts knew nothing about East Timor and describing their assessment as "shockingly superficial" and advantaging Australia.

In the past, the Australian Government and the extractive industries have not been explicit about their views on East Timor's claims.

Australia has said previously that it is not colluding with the companies, but simply doing what is in Australia's best national interest, with the $25 billion also going to local jobs in Darwin and producing tax revenue.

"Civil society could potentially perceive this as a 'form' of collusion between the Government of Australia and Darwin LNG Partners and/or the Sunrise J," Mr Gusmao said.

East Timor will sign the maritime boundary treaty tomorrow in New York, and will continue working towards a deal with Australia.

But there is a very plain bottom line for the Timorese – they want the pipeline in East Timor.

The country is under some pressure because its existing oil and gas fields are expected to run dry by the end of the decade, and observers predict the country could run out of money in less than a decade at current rates of spending.

It could take up to 10 years for Greater Sunrise development to get underway once the deal is struck.

Source: http://www.radioaustralia.net.au/international/2018-03-06/east-timor-accuses-australia-of-colluding-with-companies-over-greater-sunrise-oil-and-gas-deal/1740544

Timor-Leste gets needed boost in new border deal with Australia

The Diplomat - March 3, 2018

Luke Hunt – Earlier this week, Australia and Timor-Leste finally reached an expected agreement that defined the maritime boundary between the two countries.

The deal holds potentially immense significance for Timor-Leste, not only because it is a step toward ending years of acrimony over its disputed border with Canberra, but also because it opens a pathway for development of the potentially lucrative Greater Sunrise gas fields, which could be a boost for its economy.

The border dispute between Canberra and Dili has continued to fester since Timor-Leste gained independence from Indonesia in 2002, with the issue rooted in agreements that date back decades earlier. That had resulted in oil giants Woodside Petroleum, ConocoPhillips, Royal Dutch Shell, and Osaka Gas mothballing Greater Sunrise.

But that could soon change, with Canberra and Dili expected to sign a maritime border agreement at the United Nations in New York on March 6, to be witnessed by Secretary General Antonio Gutteres, following an agreement after talks held in Kuala Lumpur.

Should things proceed as planned, the resolution of the border dispute and then the potential go-ahead for resource development would be a boost for Timor-Leste's economy. It would also go a long way in helping resolve one of the significant challenges in the country's foreign policy ahead of elections expected in a few months' time as well as its pending bid to join ASEAN.

Many of the exact details of the deal have not been released. However, Portuguese media have reported Timor-Leste could secure as much as 80 percent of the returns, and that would be a boost in ensuring the tiny country's economic sustainability. Greater Sunrise contains energy deposits worth around $50 billion, according to some estimates.

Timor-Leste began negotiating an agreement in 2004, arguing the border should be drawn at the halfway point from Australia. That would have enabled Timor-Leste to claim most of the oil and gas field, upsetting Australia, which had already negotiated a deal with Jakarta when Timor-Leste was ruled as part of Indonesia.

Lead-manager in the project, Woodside Petroleum, said the agreement would "help to provide the fiscal and regulatory certainty" needed to develop the field but other issues still need to be resolved, and that includes an agreement on where and who will process the oil and gas.

For instance, Dili wants refineries built on its shores and efforts made to train locals and provide jobs. But the operators have balked, citing the Timor Trough, an undersea trench that plunges to depths of between 3 and 5 kilometers. Costs associated with building an 80 centimeter pipeline through the trench would be astronomical and render Greater Sunrise unviable.

Instead, Woodside and its partners would prefer to bring in the latest technology built on massive pontoons, which would enable the company to process at sea before shipping to market. Another alternative is to construct a pipeline to Darwin on Australia's north coast.

The recent inroads made follow on from progress seen late last year. A historic breakthrough leading to the agreement was announced in the Permanent Court of Arbitration in The Hague last September, enabling the final agreement to proceed. The announcement was described by former President and Prime Minister Xanana Gusmao as heralding "a new era in Timor-Leste's friendship with Australia."

The independence leader said that the agreement followed a "long and at times difficult process, to help us achieve our dream of full sovereignty and to finally settle our maritime boundaries with Australia."

Australia's relationship with Timor-Leste has been strained due to this issue, with the border dispute and development of Greater Sunrise at times shrouded by other allegations such as spying and bullying by Dili's much larger neighbor. That's unfortunate, particularly given Australia's other contributions to Timor-Leste.

Given the history of this issue as well as the other present and future domestic and foreign policy challenges Timor-Leste faces, one can only hope that the "new era" Gusmao referred to in the country's ties with Australia will in fact come into being.

Source: https://thediplomat.com/2018/03/timor-leste-gets-needed-boost-in-new-border-deal-with-australia/

Closing the Gap: Agreement reached on Australia-Timor-Leste maritime border

The Diplomat - March 1, 2018

Grant Wyeth – Earlier this week Australia and Timor-Leste reached an agreement for a treaty on their disputed maritime border at the Permanent Court of Arbitration in The Hague. The agreement will establish a maritime boundary between the two countries in the Timor Sea for the first time. The conciliation proceedings also decided on the revenue sharing arrangement for the Greater Sunrise offshore gas fields.

The established practice for determining maritime boundaries was codified in 1982 by the United Nations Convention on the Laws of the Sea (UNCLOS). The median line between the two states would delineate each state's Exclusive Economic Zone (EEZ). Prior to this, maritime boundaries had been negotiated bilaterally. The complicated nature of Timor-Leste's history, and the maritime boundaries established prior to it gaining sovereignty, led to the recent dispute.

In 1972 Indonesia and Australia negotiated the Australia – Indonesia Maritime Delimitation Treaty. This was a complex bilateral agreement that assigned separate sovereignty over the seabed and waters above it (known as the "water column"). Australia's sovereignty extends to the end of the continental shelf, giving it rights over minerals within the seabed past the median line. However, Indonesia's rights to the water column extend to the median line between the two countries. This effectively gave Australia rights to the seabed resources over the median line, with Indonesia obtaining fishing rights up to the median line.

However Portugal, at the time still the sovereign power over the eastern section of the island of Timor, did not agree to this boundary assessment. This left a gap as to where the international boundary between Australia and the then-Portuguese Timor lay. Portugal believed that boundary should be based on the median line between Australia and its territory on Timor, as became the international convention. When Portugal decolonized the island in 1975 the boundary remained in dispute.

After Indonesia annexed Timor-Leste upon Portugal's departure, Australia claimed that the agreement established with Indonesia in 1972 was extended across this previously disputed area. By this stage Indonesia had realized the boundary they had negotiated with Australia was not to their advantage, and were unwilling to extend the agreement to the area around Timor-Leste. In 1989 a treaty was signed between Indonesia and Australia establishing a "zone of cooperation" where the revenues from seabed resources in the region would be shared.

A similar arrangement was constructed with Timor-Leste in 2002, after it gained independence from Indonesia in 1999. However, as the extent of the gas deposits within the Greater Sunrise Field became apparent, Timor-Leste begun to agitate for a maritime boundary to be established under UNCLOS. A median line boundary would place most of the Greater Sunrise Field – with oil and gas deposits estimated to be worth $40 billion – within Timor-Leste's Exclusive Economic Zone.

The arbitration decision should come as a welcome relief for the government of Timor-Leste. The country's troubled history has left it without a strong industrial base, the state budget is almost entirely dependent on revenues from oil and gas extraction, and existing fields are approaching depletion. Yet, the IMF has labeled the country "the most oil dependent economy in the world," a reality that could continue to prove a significant problem unless revenues from Greater Sunrise can be used to diversify the economy.

Although the exact positioning of the boundaries was not released by the Permanent Court of Arbitration, it seems likely that the median line will be established as the permanent maritime boundary. Australia may wish to avoid the appearance of any hypocrisy in regards to future commentary on China's actions in the South China Sea (something China's Global Times has already accused Australia of), and decide that the norms laid out under UNCLOS are best applied consistently.

However, if this does turn out to be the case, a far more favorable maritime border for Timor-Leste may push Indonesia to seek the renegotiation of its maritime boundary with Australia, with a precedent set that the two countries should adhere to the modern conventions in the region. Former Indonesian Foreign Minister Mochtar Kusumaatmadja has stated that Indonesia was "taken to the cleaners" by Australia with the 1972 Maritime Delimitation Treaty. If that sentiment is maintained in Jakarta, Australia may find itself quickly back at the Permanent Court of Arbitration.

Source: https://thediplomat.com/2018/03/closing-the-gap-agreement-reached-on-australia-timor-leste-maritime-border/


Australia-Indonesia border tensions resurface

Asia Times - March 13, 2018

Alan Boyd – Indonesia's long-held resentment over Australia's sprawling maritime claims along their ill-defined border have spilled into the diplomatic arena following a recent settlement of a parallel dispute in neighboring Timor Leste, also known as East Timor.

Jakarta contends that the Timor agreement, which affects the jurisdiction of energy reserves worth billions of dollars in the Greater Sunrise gas fields, will nullify a 1997 treaty demarcating the exclusive economic zones (EEZs) of Indonesia and Australia.

Foreign ministry director-general of legal affairs and international treaties Damos Agusman said the Perth Treaty, which Indonesia has never ratified, "cannot enter into force as it stands now as it, inter alia, covers area that now belongs to TL [Timor Leste], and is the object of the conciliation."

Precise details of the Timor Leste deal have not yet been released, but it is thought to have redrawn the border with Australia midway between the countries instead of relying on a Joint Petroleum Development Area (JPDA) that had left the best of the Greater Sunrise's gas fields mostly in Australian hands. It is believed to hold at least US$31.5 billion of energy reserves.

About 80% of Greater Sunrise will remain in Australian territory if the border is simply moved an equal distance between the countries, as the field is outside the JPDA.

For Timor Leste to benefit, the JPDA would also need to be shifted east, taking it into Indonesian waters. Timor Leste and Indonesia have an equidistance agreement on their own territories in the eastern region.

Indonesia has responded as one would expect: it now wants to negotiate an equidistance agreement with Australia that would move their border further to the south and thus give Indonesia an 80% share of Sunrise. The coveted field is already closer to Indonesian territory than to Australia.

The existing border, based on a complicated series of 1972 compromises, is both east and west of the expected new Timor Leste-Australia boundary.

Like the original Timor agreement, it resulted from the inability of the new countries to agree on a demarcation; a series of fruitless negotiations was set aside in the 1980s and the de facto border became the edges of a JPDA, where royalties from oil and gas explorations would be shared.

Operating from a position of strength while Indonesia was rebuilding from the tumultuous Sukarno era, Australia took advantage of now-discredited international laws on marine boundaries that allowed signatories to use continental shelves as a basis for delineation.

Indonesia's borders were pushed well north of the midway point, creating inevitable acrimony.

In 1997, Canberra sought a similar treaty on maritime resources above the seabed, but was unsuccessful because a proposed zone extending 370 kilometers from Australian shores would have created overlapping. As is customary in such cases, a border was declared midway between the two countries.

With separate agreements for the upper and lower seabed, Australia has continental possessions that are a short distance from Indonesia, yet cannot prevent Indonesian fishermen from sailing past these islands into the midway point of the maritime border much further to the south.

The islands of Ashmore and Cartier are only 170 kilometers below the island of Roti, which Indonesia claims through its West Timor territory; yet they are 320 kilometers from Australia, which has claimed the islands since 1933. Moving the border to a midway point would make them part of Indonesia.

Uninhabited and mostly visited by Indonesian fishermen, their loss would not be felt much in Canberra. But there are bigger concerns over the fate of Christmas Island and the Cocos island group, both closer to Indonesia than to Australia, which play a vital role in Canberra's forward defense strategies.

Australian Foreign Minister Julie Bishop quickly moved to dampen calls for the negotiation of a permanent border, but nationalist feelings are running so high in Indonesia that Jakarta's hands may be tied. There is particular anger over the disputed status of Ashmore and Cartier, which some Indonesian academics say was controlled by the Dutch, Indonesia's colonial masters.

Indonesia would technically have the upper hand if the issue went to arbitration, as the equidistance rule is now standard practice under the United Nations Convention on the Law of the Sea (UNCLOS).

However, Australia withdrew from the UNCLOS tribunal and maritime jurisdiction of the International Court of Justice to halt Timor Leste's claims in the 1990s.

The re-negotiation of Timor's agreement was overseen by the Permanent Court of Arbitration (PCA) in The Hague, an inter-governmental organization that oversees the UNCLOS and the International Court of Justice. The PCA will hear disputes in special tribunals if either party rejects these covenants.

Canberra kept Timor Leste at bay for decades and could do the same to Jakarta. But this may be only the start of Australia's problems, as there is a fourth country that wants a share of the oil and gas riches in the Timor Sea.

Papua New Guinea is now keen to overturn laws dating back to the 1870s that handed many of its maritime resources to the state government of Queensland in the era before the British colony became part of an Australian federation.

A new treaty was negotiated in 1978, but many inshore islands remained Australian territory in exchange for a deal granting Papua New Guinea extended fishing rights. One of these islands, Kussa, is just 200 meters from Papua New Guinea's shores at low tide, which has apparently become too close for comfort.

Source: http://www.atimes.com/article/australia-indonesia-border-tensions-resurface/

Julie Bishop pushes back at Indonesia on maritime boundaries

Sydney Morning Herald - March 8, 2018

James Massola, Jakarta – The Turnbull government has pushed back at Indonesia, saying it was unnecessary to renegotiate the maritime boundary between the two countries, a day after a senior official in Jakarta flagged the possibility.

Foreign Minister Julie Bishop told Fairfax Media on Thursday that Australia did not "believe that the conclusion of permanent boundaries between Australia and Timor-Leste requires Australia to renegotiate boundaries with Indonesia".

"We have a settled understanding of boundaries with Indonesia which has served both countries well for several decades," she said.

"During the conciliation with Timor-Leste, we have kept the interests of Indonesia in mind and have briefed Indonesia on the terms of the treaty between Australia and Timor-Leste."

The Foreign Minister's comments come a day after Indonesia's director-general of legal affairs and international treaties, Damos Agusman, told Fairfax Media "the Perth treaty cannot enter into force as it stands now as it, inter alia, covers area that now belongs to TL [East Timor], and the object of the conciliation". Loading

Mr Agusman's comments will likely ruffle feathers in Canberra as will the suggestion from Jakarta that it "reserves all its rights against any outcomes that might potentially affect" its sovereign rights.

The Perth treaty was agreed in 1997 between Australia and Indonesia – though it has not yet been ratified – and sets most of the maritime boundary of the two nations at the so-called median point between the two countries.

This has meant Indonesia's fishing rights extend further south than its right to explore the seabed for oil and gas, which is governed by an earlier treaty from 1972. That treaty sets the boundary between the countries much closer to Indonesia.

Also on Thursday, a spokesman for Indonesia's Foreign Ministry confirmed President Joko Widodo would have a half-hour bilateral meeting with Prime Minister Malcolm Turnbull at the ASEAN-Australia summit in Sydney, followed by dinner at the Prime Minister's residence.

The two nation's will not finalise a much-delayed free trade agreement at the summit, as had been hoped, but the official said Jakarta still hopes to finalise it by the end of the year.

Nations attending the summit are also expected to sign a memorandum of understanding on counter-terrorism that covers issues such as greater intelligence sharing and cross-border movements.

International law expert Professor Donald Rothwell has warned renegotiating a complex agreement such as the Perth treaty could potentially make diplomats in Canberra very nervous.

Mr Agusman's comments came after an historic agreement between East Timor and Australia was struck in New York over maritime boundaries, which will potentially see billions in extra revenue flow to East Timor from the Sunrise gas field, assuming development can now take place.

Source: https://www.smh.com.au/world/asia/julie-bishop-pushes-back-at-indonesia-on-maritime-boundaries-20180308-p4z3gu.html

Indonesia eyes change to maritime treaty after Timor-Australia deal

Sydney Morning Herald - March 7, 2018

James Massola, Jakarta – The Indonesian government wants Australia to re-open discussions on maritime boundaries after a deal was finally struck to resolve a similar dispute between East Timor and Australia.

In comments that suggest Canberra could face a new headache over economic borders at sea, the director-general of legal affairs and international treaties at Indonesia's Foreign Ministry, Damos Agusman, told Fairfax Media that Jakarta wanted new talks over the Perth Treaty, signed in 1997.

The 1997 treaty has never entered into force as Indonesia has not ratified it, though both nations have observed it. The document sets out Australia's and Indonesia's exclusive economic zones using the median line between the two countries.

This has meant Indonesia's fishing rights extend further south than its right to explore the seabed for oil and gas, which is governed by an earlier treaty from 1972. That treaty sets the boundary between the countries much closer to Indonesia.

Mr Agusman said on Wednesday: "the Perth treaty cannot enter into force as it stands now as it, inter alia, covers area that now belongs to TL [East Timor], and the object of the conciliation".

He said the agreement between East Timor and Australia was complex and would be studied closely, and reminded both nations that any potential boundary line must be "subjected to future agreement with Indonesia".

Australian National University international law expert Donald Rothwell told Fairfax Media the Perth treaty was extremely complex and that Indonesia could be targeting it as a trade off, instead of potentially seeking access to the Greater Sunrise gas fields, as has also been flagged.

Access to the gas fields could generate significant revenue for Indonesia, Professor Rothwell said. The fields hold an estimated $US40 billion ($A51 billion) worth of gas and now billions in extra revenue is expected to flow to East Timor.

"Given the complexity of the Perth treaty – it covers the greatest expanse of our boundaries with our major maritime neighbour, Indonesia – this [comments by Mr Damos] would create nervousness in Canberra among government officials," Professor Rothwell said. Loading

It was less likely, he added, that the 1972 seabed boundaries could be renegotiated successfully.

La Trobe University expert Bec Strating said if Indonesia wanted to renegotiate the Perth treaty it would be a headache for Australia, and could deliver Indonesia greater fishing rights, but not necessarily greater rights to oil and gas exploration.

"In terms of the cost-benefit analysis, dealing with Indonesia on an exclusive economic zone treaty that is not ratified is easier than the Timor boundary dispute," Dr Strating said.

The deal struck between East Timor and Australia will bring an end to the long-running dispute between the two nations, and will see Dili receive a larger share of the revenue from the Greater Sunrise gas field.

The exact amount of revenue will be between 70 and 80 per cent, depending on whether the resources are processed in East Timor or Australia.

In New York, Foreign Minister Julie Bishop said the treaty would open a "new chapter" in relations between the two nations.

"Australia has an enduring interest in a stable and prosperous Timor-Leste... we want Timor-Leste to achieve its economic potential," she said.

East Timorese Minister Agio Pereira said the deal was "equitable" and "consistent with international law".

As far back as 2002, then-Australian foreign minister Alexander Downer warned that re-drawing the maritime boundaries with East Timor could have a knock effect and lead to re-negotiation of the maritime boundaries between Australia and Indonesia.

– with Reuters

Source: https://www.smh.com.au/world/asia/indonesia-eyes-change-to-maritime-treaty-after-timor-australia-deal-20180307-p4z39v.html

Australia and East Timor maritime agreement could 'unravel' borders with

ABC News - March 6, 2018

Anne Barker – A landmark agreement to be signed in New York tomorrow (AEDT) will close the door on the long and bitter dispute between Australia and East Timor over their maritime boundary.

But it could lead to a new legal wrangle for Australia if Indonesia tries to use the deal to renegotiate its own outdated boundaries with Australia.

In a worst-case scenario for Australia – if that were to happen – it could allow Indonesia to claim its own rights to lucrative oil and gas reserves in the Timor Sea.

The new maritime treaty – to be signed at United Nations headquarters – will draw a permanent boundary between Australia and East Timor for the first time, and set down a formula for sharing billions of dollars in future oil and gas revenues from the Timor Sea.

Details of the agreement have been kept secret until now. But it is expected to include a boundary at the median line – or midway point – between the two countries, which is a long way south of the boundary Australia had long proposed – at the edge of its continental shelf which extends to within 50 nautical miles of East Timor's south coast.

The treaty is crucial for East Timor's economic future, given its over-reliance on other dwindling petroleum royalties, and because a median line boundary would likely give the tiny nation sovereignty over more of the lucrative Greater Sunrise oil and gas field, which estimates suggest could be worth up to $64.5 billion in revenue. Questions about Australian-Indonesian border

However, a median-line boundary between Australia and East Timor could have implications for Australia's far longer boundaries with neighbouring Indonesia, if not now then down the track. It's a prospect that successive Australian governments have sought to avoid.

Indeed, in 2002 – the year East Timor gained independence – Australia's then foreign minister Alexander Downer warned that redrawing the maritime boundaries with East Timor would risk "unravelling" thousands of kilometres of boundaries Australia had long ago settled with Indonesia.

"What Australia doesn't want is to unravel all of our maritime boundaries which have been laboriously negotiated over many years with all our neighbours," he said at the time.

"Our maritime boundaries with Indonesia cover several thousand kilometres. That is a very, very big issue for us and we are not in the game of renegotiating them."

Now, 16 years on, that scenario may not be so far-fetched. You only have to look at a map of Australia's maritime boundaries with Indonesia and East Timor, to see the potential problem. Putting the boundary with East Timor at the midway point would introduce a dog leg with the adjoining boundaries with Indonesia.

Australia's seabed boundaries with Indonesia were settled as early as 1971, when most of Australia's maritime boundaries were based on the continental shelf, which again extends well beyond the median line and ends close to the Indonesian coastline.

But international law has changed since then and today favours the median line, and not the continental shelf.

The 1982 UN Convention on the Law of the Sea stipulates that "where the coasts of two states are opposite or adjacent to each other, neither of the two states is entitled... to extend its territorial sea beyond the median line."

Door open for Indonesian gas access

That means if the maritime boundaries with Indonesia were negotiated today, they'd look completely different and give Indonesia far greater rights to the seabed. Crucially, it would arguably give Indonesia rights to a share of the Greater Sunrise field.

Even in 1977 – five years after the boundaries were negotiated – Indonesia's then foreign minister Mochtar Kusamaatmadja claimed that Australia had "taken Indonesia to the cleaners" over the boundary negotiations.

Accordingly, the median line was later used to determine Indonesia's Exclusive Economic Zone in a separate treaty in 1997, such that Indonesia's fishing rights today extend much further south than its rights to the seabed (oil and gas).

In fact, Indonesia has never ratified the 1997 treaty, although it has honoured it.

But international law expert Don Rothwell, from the Australian National University, believed that decision leaves the door open to Indonesia to seek to renegotiate its own boundaries with Australia, in the same way that East Timor has successfully done.

"Because Indonesia has yet to ratify [the treaty] it gives Indonesia the option to come back to Australia and say we'd like to revisit particular aspects of that treaty, especially in light of the final maritime boundary arrangements you have now entered into with East Timor," Professor Rothwell said.

"That could open up for Australia quite a significant can of worms in terms of facing the prospect of renegotiating a significant swag of our maritime boundary arrangements with Indonesia, which stretch from West Timor right out alongside the boundary with Java and into the Indian Ocean."

Australia could face challenge to negotiate

Most contentious of all are the so-called "lateral" boundaries that run perpendicular to the median line between Australia and East Timor.

The Greater Sunrise field straddles the eastern lateral boundary, very close to the existing Australia-Indonesia boundary. If Indonesia chose to pursue the issue there could be significant implications for Australia's maritime sovereignty, and the rights to Greater Sunrise.

"I think that [Indonesia] would be saying look, Australia has been prepared to effectively redraw these boundaries with East Timor," Professor Rothwell said.

"If Australia has been prepared to renegotiate some of those boundaries with East Timor why can't Australia renegotiate the boundaries with Indonesia that were settled some time ago also?

"Which would then create some considerable complexity because then you'd be looking at a three-way negotiation on how that particular area of the seabed should be carved up."

Professor Rothwell said Australia had no doubt kept Indonesian officials abreast of its ongoing boundary negotiations with East Timor, to avoid such an outcome.

But he said Indonesian officials until now have not been prepared to go on the record in terms of how they might react to the new boundary arrangements in the Timor Sea, once they're revealed.

"Having said that there is a general principle in international law that boundaries should be respected, and not be redrawn," he said. "And that treaties, once they're concluded, should be accepted. States are bound by treaties in good faith."

Good faith is one thing but billions of dollars in untapped oil and gas reserves is quite another. The ABC sought comment from the Indonesian Government and maritime experts, but had not yet received a response.

A history of treaties in the Timor Sea

In 1989 Australia and Indonesia signed the Timor Gap Treaty when East Timor was still under Indonesian occupation. East Timor was left with no permanent maritime border and Indonesia and Australia got to share the wealth in what was known as the Timor Gap.

In 2002 East Timor gained independence and the Timor Sea Treaty was signed, but no permanent maritime border was negotiated. East Timor has long argued the border should sit halfway between it and Australia, placing most of the Greater Sunrise oil and gas field in their territory.

In 2004 East Timor started negotiating with Australia again about the border.

In 2006 the CMATS treaty was signed, but no permanent border was set, and instead it ruled that revenue from the Greater Sunrise oil and gas field would be split evenly between the two countries.

Source: http://www.abc.net.au/news/2018-03-06/australia-east-timor-deal-could-unravel-border-with-indonesia/9515874

Political parties & elections

East Timor parties form alliance for new elections

Associated Press - March 16, 2018

Oki Raimundos, Dili, East Timor – Three political parties that brought down East Timor's minority government say they will campaign under one umbrella for new elections due in May.

The parties in the grouping, which calls itself the Alliance for Change and Progress, on Friday announced their official lists of candidates.

East Timor's parliament was dissolved in January after a minority government formed last year was unable to get its policy program and budget through parliament.

The alliance includes the National Congress for Timorese Reconstruction party, led by former prime minister and independence hero Xanana Gusmao, and two smaller parties that won seats for the first time last year.

Fretilin and the Democrats, which made up the minority government, said they will campaign separately but could renew their coalition if they win enough votes.

Gusmao said the political developments of the past year showed that parties and leaders needed to work together to serve East Timor, one of the world's youngest nations and among the poorest in Asia. "Together we can serve our society better," he said.

Gusmao is set to benefit politically from his role in negotiations that earlier this month settled the sea border between East Timor and Australia and provisionally set formulas for splitting oil and gas riches under the seabed.

He returned to East Timor to a hero's welcome last weekend with thousands of East Timorese lining roads to the country's international airport.

Source: http://abcnews.go.com/International/wireStory/east-timor-parties-form-alliance-elections-53792012

Health & education

Timor-Leste 'spends less than any other country on healthcare'

Public Finance International - March 13, 2018

Simone Rensch – Timor-Leste spends the least amount of money on healthcare than any other country in the world, a new map has revealed.

The Southeast Asian nation only spends 2.4% of government expenditure on healthcare, according to a map released last month by laser eye survey company Focus Clinic. This comes as international experts call for increased investment in public health.

The World Health Organisation and the World Bank found half the world lacks access to health services and 100 million people are pushed into poverty because of health expenses, in a report out in December.

Focus Clinic's map showed countries spending the least on healthcare services are in Africa and Asia, including Laos at 3.4%, Myanmar and Eritrea at 3.6%, and Yemen and Azerbaijan at 3.9%.

Overall, seven of the ten countries with the lowest healthcare spending are located in Asia, with the remaining three in Africa.

The World Bank's global lead on health financing Christorph Kurowski told PF International: "This situation represents the low levels of public investments in health. Out-of-pocket payments by individuals – which are the most inefficient and inequitable way to finance a health system – loom large.

"Governments should prioritise pre-paid and pooled financing to ensure that health systems are sustainably and equitably financed at scale.

"There is a strong complementary and supportive role for donor funds and the private sector, but country governments need to be in the driver's seat and significantly scaling up investment in health."

This compares to Andorra with the highest percentage of government expenditure reserved for healthcare at 27.9%, followed by Maldives at 26.6% and Nicaragua at 24%.

But global health policy and senior fellow at the Center for Global Development Kalipso Chalkidou said government spending on health is not always enough to determine the health outcomes. She told PF International: "The percentage of gross domestic product spending targets may not be a good enough proxy for performance.

"In fast growing economies, health spending will grow in absolute terms even if the percentage of GDP stays the same. So the amount spent on healthcare matters, but it is far from the only thing that determines the results."

She pointed out that even countries who spend relatively more than other on healthcare may still not see good health outcomes and more needs to be done than just putting money into the system.

Source: http://www.publicfinanceinternational.org/news/2018/03/timor-leste-spends-less-any-other-country-healthcare

International solidarity

The Australian who spent millions fighting for justice for Timor

New Daily - March 8, 2018

Mike Bruce – In 2005, Australian businessman Ian Melrose spent $3.5 million of his own money to support Timor-Leste's fight with Australia over lucrative oil and gas fields in the Timor Sea.

After this week's announcement of a treaty that will finally see the poor island nation secure 80 per cent of those oil and gas fields, you'd think he would be viewing his mission as accomplished.

Far from it. A sense of injustice still rankles with the 64-year-old entrepreneur who has made a crusade out of seeking justice and quality of life for Timor-Leste.

"Yes, this is a step forward, but Australia still has a long way to go to make good for its past thefts," Mr Melrose told The New Daily.

On Wednesday, the developing country's 16-year fight for its right to the oil and gas reserves in its waters – estimated to be worth $56 billion – appeared to have ended with the signing of a treaty with Australia at the United Nations.

The agreement will see a new maritime border that runs halfway between the two countries, through the Greater Sunrise gas field, but with 80 per cent of the field falling into Timor-Leste's economic zone.

Negotiations initially offered Timor-Leste less than 20 per cent of the fields, despite a much bigger portion of them being situated close to the new country.

But Mr Melrose said the treaty only goes some way to righting past wrongs, and claimed Australia still owes Timor-Leste at least $5 billion in royalties from what he argued was an illegal grab by Australia that included the Laminaria and Corallina oil fields in the Timor Sea.

"This new treaty is not addressing any of that past theft," he said. "It still doesn't return that stolen money and so they [the Timorese] are still being ripped off." The treaty signed at the UN stipulates "no compensation for past exploitation".

The unlikely crusader

Mr Melrose, the founder and director of a company selling prescription eyewear, said he has never been a member of a political party* and had never so much as written a letter to his local MP until 2004 when he happened to read an article about Timor that left him incensed.

The article detailed the death of a 12-year-old East Timorese girl who choked to death on round-worms which could have been treated by tablets that cost less than $1.

"[Around this time] this was the poorest country in Asia and it had gone through hell during the occupation [by Indonesia]... Australia knew atrocities were happening and did nothing," he said.

"I was horrified when I discovered the Howard government was taking billions of dollars worth of oil and gas royalties that, according to International Law, would belong to East Timor. How bad is it that we have to steal from such have-nots?"

That prompted Mr Melrose to put his own money towards television and newspaper ads and letterbox drops to highlight the injustice of the government's grab for the Timor Sea resources, on which the developing nation was greatly dependent.

The campaign ultimately cost him $3.5 million. On top of that, he is a regular and generous donor to health, education and micro-finance organisations in Timor-Leste, most notably a malnutrition clinic in the capital Dili.

While Mr Melrose saw the new treaty as a step in the right direction, he hoped when it comes to be ratified by the Australian government, it would prompt further questions about what Australia still owes Timor-Leste.

"The story is not finished and I am not satisfied... I am sure when this treaty comes before JSCOT [Joint Standing Committee on Treaties], some politicians will be asking about Laminaria and Corallina. We had no right to that. I think the Australian public don't know the full story. It's still absolutely disgraceful."

[Mr Melrose reportedly donated $170,000 to the Nick Xenophon Team in 2016.]

Source: https://thenewdaily.com.au/news/national/2018/03/07/timor-leste-ian-melrose/

Australia to use East Timor boundary treaty to bolster ASEAN ties

Nikkei Asian Review - March 5, 2018

Simon Roughneen, Singapore – After a saga lasting nearly two decades, Australia will on March 6 sign a boundary treaty with East Timor that will allow the Southeast Asian country to earn much-needed revenue from gas fields under the Timor Sea.

Australia's decision is seen as tactical move to strengthen ties with Southeast Asian countries as it finds itself torn between the interests of the U.S. and China.

"The Parties have reached agreement on a treaty which delimits the maritime boundary between them in the Timor Sea," read an announcement made by the Permanent Court of Arbitration on February 25 after negotiations in Kuala Lumpur.

Moreover, the treaty "addresses the legal status of the Greater Sunrise gas field, the establishment of a Special Regime for Greater Sunrise, and a pathway to the development of the resource."

Australia's previous reluctance to establish a maritime boundary with the East Timorese had earned a certain amount of criticism. Many, such as Tom Clarke, spokesman for the Timor Sea Justice Campaign, felt Canberra was strong-arming an impoverished, resource-dependent country that had recently won a long struggle for independence.

East Timor depended on oil and gas for 85% of its revenue in 2017, according to La'o Hamutuk, a Dili think tank. But with existing fields running dry, access to Greater Sunrise is vital to the country's economic prospects.

For Australia, the signing is timely as it comes ahead of the ASEAN-Australian Special Summit in Sydney on March 17-18, the first such meeting to be held in the country.

Australia conducts about 15% of its trade with the Association of Southeast Asian Nations, making the 10-country economic bloc its third-largest trading partner after China and the EU.

With a population of 638 million, ASEAN's combined economic output of $2.5 trillion is about twice Australia's, which is in turn slightly bigger than the economy of Indonesia, ASEAN's largest member.

There is potential for greater economic links between Australia and ASEAN. ANZ Research reported in 2017 that, despite the signing of a free trade deal incorporating the bloc, Australia and New Zealand in 2010, trade growth had seen "relative stagnation" in the years since.

East Timor, known officially as the Democratic Republic of Timor-Leste, has applied to join ASEAN and the signing of the treaty on March 6 could provide a boost to the election campaign of East Timorese lead negotiator, former president, prime minister and independence fighter Xanana Gusmao, who hopes to regain power in May 12 parliamentary elections. The agreement should enhance Australia's standing with its neighbors ahead of the March 17-18 summit, though one notable head of government will not be there. Philippine President Rodrigo Duterte is sending Foreign Minister Alan Peter Cayetano in his place.

Australia provides development and counterterrorism assistance to the Philippines, but relations have been strained recently over Australian criticism of Duterte's so-called war on drugs.

Australia supported East Timor in the early days after independence. It stationed troops in the country for more than a decade after the 1999 vote to secede from Indonesia, but ties have simultaneously been dogged by the boundary stand-off. East Timor had been under Jakarta's control for close to a quarter of a century, during which an estimated 200,000 East Timorese died in the suppression of the independence movement.

East Timor's two decades as an independent country have coincided with China's economic rise. China has enhanced trade and investment links throughout the region and now accounts for a quarter of Australia's total trade.

It did not take long for the newly independent country to feel the impact of China's growth. "The leaders of Timor-Leste regard China like an elder brother and a most reliable friend," Su Jian, then-Chinese ambassador in Dili, told The New York Times in 2007. Several major government buildings in the capital have since been built with Beijing's assistance.

But Canberra has grown apprehensive over China's growing influence in Southeast Asia, and in Australia itself. Its intelligence agency stated that it had "identified foreign powers clandestinely seeking to shape the opinions of members of the Australian public, media organizations and government officials in order to advance their country's own political objectives," in its 2016-17 annual report.

"Ethnic and religious communities in Australia were also the subject of covert influence operations designed to diminish their criticism of foreign governments," the report added.

At the same time, Washington leaving the Trans Pacific Partnership resulted in a number of difficult questions for Turnbull's government.

"There remains uncertainty in Southeast Asia about the direction of U.S. policy in relation to the region and ASEAN," according to a paper published by the Australian parliament on March 1.

The U.S. has followed up its withdrawal from the TPP with import tariffs on steel, aluminum, washing machines and solar panels. Australia's dependence on trade with China makes it difficult to support the U.S. moves.

"My concern remains that, on the back of actions like this, we could see retaliatory measures that are put in place by other major economies," Steven Ciobo, Australia's trade minister, told reporters in Sydney on March 2.

Faced with a tricky balancing act between its main security ally and its biggest trading partner, Australia wants to shore up relations with its Asian neighbors.

Speaking in Singapore in mid-2017, Australian Prime Minister Malcolm Turnbull hinted that Australia intended to resolve its standoff with East Timor by calling for regional disputes to be "resolved by dialogue" and where "big fish neither eat nor intimidate the small."

In the same speech, Turnbull said his government had no desire to "choose" between the U.S. and China, before saying that Australia should "reinforce" its partnership with ASEAN.

Some observers, such as former Australian Prime Minister Paul Keating, have even called for Australia to join the bloc.

"This is what I would call Australia's Plan B," said John Blaxland, director of the Southeast Asia Institute at Australian National University, discussing the upcoming Australia-ASEAN summit.

"The uncertainty is not just about what the U.S. will do but also China's approach to the world with Xi [Jinping] now looking like he will be president for life."

Source: https://asia.nikkei.com/Politics-Economy/International-Relations/Australia-to-use-East-Timor-boundary-treaty-to-bolster-ASEAN-ties

Economy & investment

Timor-Leste's non-oil economy contracts by 1.8% in 2017

Macauhub.com - March 21, 2018

The on-oil economy of Timor-Leste (East Timor) contracted by 1.8% in 2017, mainly the country's economy, according to a World Bank report.

The report, published on Tuesday, shows the impact Timor's political crisis is having on the Timorese economy, with government spending slipping 24% in 2017 compared with 2016. The non-oil economy, which saw growth of 5% in 2016, contracted by 1.8% in 2017.

The report projects that the economy will return to growth in 2018, with non-oil GDP increasing by 2.8% with a forecast of a return of private investment in the short term.

The drop in oil production and coffee exports in 2017, due to worse weather conditions, also affected the Timorese economy. If the oil sector is taken into account, real GDP contracted 10% in 2017, following growth of 1% in 2016.

Gross national income, which fell from US$4.5 billion in 2011 to US$2.3 billion in 2016, recovered slightly to US$2.9 billion in 2017. In 2017 the State contracted loans of US$21.9 million – down from US$30.6 million in 2016, according to the World Bank.

Although private consumption was more robust in 2017, both public and private investment fell, and direct foreign investment "dried up," the World Bank report said. (macauhub)

Source: https://macauhub.com.mo/2018/03/21/pt-economia-timorense-nao-petrolifera-caiu-18-por-cento-em-2017/

Invasion & occupation

How Australia covered up East Timor's suffering

The Diplomat - March 7, 2018

Peter Job – As announced by the Permanent Court of Arbitration on February 25, there appears to be hope at last for a settlement of the prolonged legal battle between Australia and Timor-Leste over the Timor Sea.

In this context, it is worth noting that 2018 marks 41 years since the publication of an important document which recorded a different struggle in East Timor, one also with a significant element of Australian involvement.

In 1977, over a year after the Indonesian invasion of December 7, 1975, the situation in East Timor was dire. As the Timor-Leste Commission for Truth and Reconciliation later documented, the invasion, which met strong resistance from the Fretilin independence movement, was accompanied by severe human rights abuses, including massacres from the first day aimed at terrorizing the population into compliance. In its wake, large numbers of Timorese had fled to areas in the countryside controlled by Fretilin, where Indonesian tactics of destroying crops and targeting food supplies were leading to increasing privation and loss of life.

In Australia, relations with Suharto's New Order were considered vital to the then-Fraser government's foreign policy agenda. The regime had overthrown Sukarno and destroyed the Communist Party of Indonesia the previous decade, actions which, although costing upwards of half a million lives, the Australian government had supported through Radio Australia and other means. In the wake of the unification of Vietnam and the fall of Laos and Cambodia to Marxist regimes in 1975, the Fraser government viewed support for pro-Western anti-communist regimes in the region as vital. These goals were also strongly encouraged by the United States. The Fraser government also saw Indonesia as central to its goals of strengthening ties with ASEAN nations and with the wider Asian region. The desire to negotiate an agreement to allow the exploitation of Timor Sea oil resources provided further impetus to this position. Military aid to Indonesia accordingly continued after the invasion, including the provision of Nomad aircraft, which were used in East Timor (despite assurances to the contrary by the Indonesian ambassador).

It was in this context that James Dunn, a former military intelligence officer and diplomat who had been consul to Portuguese Timor in the early 1960s, published "The Dunn Report on East Timor" in February 1977. The report, based on interviews Dunn conducted with Timorese refugees in Portugal, detailed accounts of severe human rights abuses, including massacres, sexual violence, deliberately induced famine, and other abuses. Dunn concluded that claims from Catholic sources of 100,000 deaths were "credible" due to widespread killing in the mountains.

The Fraser government and the Department of Foreign Affairs (DFA) greeted the report with consternation. Although the Fraser government had not at that stage recognized the incorporation of East Timor into Indonesia, it was on an unambiguous trajectory to do so. The domestic and international reactions to the revelations in the Dunn Report constituted a threat to this, and to its goal of supporting and protecting the Suharto regime in the international arena. The Fraser government therefore worked to publicly deny the reality of the situation in East Timor and to neutralize the work of Dunn and other activists.

In response to a question in parliament on the report on March 16, Foreign Minister Andrew Peacock ignored the actual allegations, emphasized the report's lack of official status, and warned against allowing the matter to create "misunderstanding" with Indonesia. DFA officials also displayed a bias toward reflexively supporting the Suharto regime and rejecting criticism of it. Even though the report was based upon the direct testimony of eyewitness who had expressed a willingness to speak to international inquiries, notations on a DFA copy of the report by Jakarta embassy officers Woolcott and Hogue describe it as "hearsay." Amongst a number of cynical notations on the margins of the report itself is the question, "How do you loot a girl?" transcribed next to a sentence reporting "a great deal of looting and raping of girls in Baucau."

In early 1977, Dunn took his message to a number of European countries, including France, Britain, Sweden, the Netherlands, and Portugal, as well as to the United States. In each he gained some media attention and was received at a high level, including by senior foreign ministry officials in the Netherlands, France, and Sweden, concerned parliamentarians in Britain, and their counterparts in the U.S. Congress.

With Australia seen as an authority of the Timor situation by much of the international community, the Fraser government chose to use this position to lobby for the Suharto regime, relaying to its missions in the countries Dunn visited instructions as to how to discredit his claims. A cable to the embassy in Sweden, for example, directed it to convey the Australian belief that there was "no information" to substantiate allegations of rape or abuses against civilians, that the scale of atrocities had been "highly exaggerated," the death rate greatly overstated, and the Dunn allegations were merely "hearsay and second-hand evidence."

Dunn's allegations had a significant impact in the Netherlands, with the report published in the press and the second chamber of Dutch parliament calling for an international inquiry on March 10. The Dutch government approached the International Red Cross to inquire about such an investigation. Apparently respecting its expertise, it also requested the Australian government to supply its own assessment of Dunn's allegations.

In response, DFA officials in both Canberra and The Hague provided the Australia-supported narrative, arguing to the Dutch ambassador and the Dutch minister for foreign affairs respectively that "very little would be achieved" by an investigation, that it would be deeply resented by the Indonesians and that Dunn's finding were "hearsay." The Dutch subsequently abandoned support for an inquiry. The Australian efforts appear to have been a significant element in this decision, with the Dutch director general of political affairs telling the Australian ambassador that his government "greatly appreciated" the Australian attitude to East Timor, "which was very close to that of the Dutch."

Arguably the Dunn Report had its most significant impact in the United States, with Dunn invited to speak to the Congressional House Committee on International Relations on March 23, 1977. In the leadup to the hearings, U.S. and Australian officials saw a common interest in working together to minimize the impact of Dunn's testimony. The U.S. ambassador to Indonesia advised Australian Ambassador Woolcott that anything the Australian government could do to put Dunn's report into "proper perspective" would be helpful. The Indonesian ambassador to the UN also asked his Australian counterpart if Australia could "do more in Washington." DFA complied, with a cable from Canberra to Washington of March 16 repeating that Dunn's allegations were "hearsay" and claiming that a "thorough study of all the information... available to us" had failed to corroborate his claims. Given that Australia had not substantially investigated Dunn's findings, the basis of this contention is unclear. Dunn's testimony was also preceded by that of State Department official Robert Oakley, who presented a distorted outline of the situation similar to the narrative promoted by Indonesia and Australia.

Nonetheless, Dunn's testimony, which outlined the findings of his report and corrected Oakley's misrepresentations, proved influential. While the Carter administration continued relations with the Suharto regime as normal, including the provision of arms, in the longer term it galvanized the U.S. solidarity movement and led to a series of further congressional investigations in subsequent years which proved important in keeping an awareness of the situation in East Timor alive.

As Dunn published his report, the humanitarian crisis in East Timor was accelerating. In the following years the bombing, napalming, defoliation, deliberate destruction of rural resources, and the forced relocation of the Timorese population into camps would instigate the famine that would take the majority of the lives lost during the occupation. The occupation would ultimately cause the destruction of up to a third of the population, making it proportionally one of the major human-caused tragedies of the 20th century. With the Suharto regime dependent upon international goodwill and domestic and international aid, significant international attention, such as the investigation originally proposed by the Dutch, would have been likely to have at least mitigated the most severe abuses and saved many lives. Australian lobbying on the Suharto regime's behalf proved a significant factor in keeping the issue off the international agenda and allowing it to continue its bloody program of "encirclement and annihilation" unimpeded.

Nevertheless, the impact of the Dunn Report was significant. It revived the issue in the Australian media and parliament and provided activists with a valuable evidence-based tool as increasing evidence of the humanitarian crisis in East Timor emerged in the following years. By taking his evidence to the U.S. Congress, Dunn put the issue on the agenda of U.S. politicians and activists, ensuring it would be an issue in the following years and decades. By bringing the matter to the attention of international civil society it was also responsible for laying the groundwork for long term campaigns in Europe and elsewhere. The Dunn Report can therefore be seen as an essential milestone in the history of the struggle for East Timorese independence, without which events well may not have eventuated as they did.

[Peter Job is a Ph.D. candidate in International and Political studies at the University of New South Wales in Canberra. Job was an activist for an independent East Timor during the Indonesian occupation, including working on the Radio Maubere radio link to Fretilin in 1978.]

Source: https://thediplomat.com/2018/03/how-australia-ignored-east-timors-suffering/

Analysis & opinion

Timor-Leste – Australia maritime boundary treaty: Victory for Dili? –

Eurasia Review - March 28, 2018

Viji Menon – Timor-Leste and Australia signed a historic treaty in New York on 6 March 2018, witnessed by the UN Secretary-General, establishing permanent maritime boundaries between them. The Treaty was the culmination of several rounds of negotiations since January 2017 between the two countries, and was facilitated by the Conciliation Commission established under the UN Convention on the Law of the Sea.

In a joint press release with Australia, Timor-Leste's main negotiator in the talks, former Prime Minister Xanana Gusmao, declared that the treaty "establishes for the first time, a fair border between our two countries, based on international law". Australian Foreign Minister Julie Bishop described the signing of the treaty as a "milestone" and stated that "It reinforces our respect for, and the importance of, the international rules-based order in resolving disputes". Transitioning to Fairness

The boundary issue has long been linked by Timor-Leste to the issue of sovereignty and therefore is hugely symbolic for it. Australia had sought a boundary that was aligned with its continental shelf, but Timor-Leste's position was that that the border should be the median line between it and Australia. In January 2017, Timor-Leste terminated the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS) with Australia as it was not happy with this treaty.

It provided that revenues from the Greater Sunrise field would be shared 50:50 between the two countries. The CMATS also put on hold any claim to sovereign rights and did not establish any local seabed boundary, the final definition of which was postponed until the treaty's expiration in 50 years.

Under the new treaty, oil and gas fields currently shared between Australia and Timor-Leste in the Joint Petroleum Development Area will transition to Timor-Leste's exclusive jurisdiction. While they have agreed to maintain the existing fiscal and regulatory arrangements for the Bayu Undan and Kitan fields, Timor-Leste will derive 100 percent of future upstream revenue from these fields. However, as oil resources in these fields are drying up, this may not amount to much revenue for Timor-Leste.

On the Greater Sunrise field, the Treaty recognises Australia's and Timor-Leste's shared sovereign rights over the resources there. The Treaty establishes the Greater Sunrise Special Regime to jointly manage and develop this resource and to share revenue. Australia and Timor-Leste will establish a Designated Authority and a Governance Board to oversee Greater Sunrise.

Rushing against time

The two countries have agreed to share upstream revenue:

This formula, regardless of what is agreed upon finally, represents an improvement for Timor-Leste on the 50:50 split outlined in the previous CMATS Treaty. The reaction to the Treaty in Timor-Leste has been overwhelmingly positive, while expressing the expectation that the pipeline will bring the gas to Timor-Leste.

It is uncertain, however, as to how long it will take before oil and gas resources in the Greater Sunrise field are exploited and provide revenues for Timor-Leste, regardless of the location of the pipeline. Some experts estimate that it could take as long as 10-15 years. Time is of the essence for Timor-Leste as the existing fields are drying up, as revenues in the Petroleum Fund are diminishing, and as there are few other sources of non-oil income.

Too costly, too risky?

As the critical issue of the location of the pipeline to transport the gas from Greater Sunrise remains to be resolved, discussions are continuing between the joint venture (the oil companies) and Timor-Leste. Woodside, the main partner in the joint venture, has expressed its preference for a pipeline to Darwin in Australia, as opposed to the option preferred by Timor-Leste, which is a pipeline from Greater Sunrise to an onshore processing facility in Timor-Leste (Tase Mane project).

Then Prime Minister Xanana Gusmao explained in a speech in 2013 that the plan was to develop the south coast as a sub-regional centre for the petroleum industry, providing direct economic dividends for the country.

The Tase Mane project includes three operational clusters along the country's south coast facing the Timor Sea: a supply base in Suai, where logistics and service works will be undertaken and sourced for the petroleum industry; a refinery and a petrochemical industry to be established to the east; and further to the east the government has designated a sizeable area for the development of LNG projects. This will be the location at which the natural gas pipeline reaches Timor-Leste.

The joint venture has claimed that the Timorese proposal is too costly, too risky and not commercially viable. It is uncertain as to what will happen to the Tase Mane project if there is no agreement on bringing the gas to Timor-Leste, or if this will be a deal-breaker. Timor-Leste will still get 80% of the revenues if the pipeline goes to Australia. Complicated Negotiations with Indonesia?

Another complication for Timor-Leste is that the lateral lines of the new agreement join with the existing 1972 continental shelf boundary between Australia and Indonesia. This means that Australia's and Timor-Leste's new boundary arrangements do not affect Indonesia's rights or change Australia's existing boundaries with Indonesia.

Timor-Leste has also yet to reach an agreement on its maritime boundaries with Indonesia, and although bilateral boundary negotiations were initiated in late 2015, agreements have yet to be concluded.

Following the signing of the Treaty, Prime Minister Mari Alkatiri was quoted in the Timor media as stating: "If we do not have agreement with Indonesia... it has not yet been completed, therefore it is necessary for us to negotiate with Indonesia." Hernani Coelho, Timor-Leste's Petroleum Minister, said recently that the negotiations with Indonesia on the maritime boundaries could be "complicated."

[Viji Menon is a Visiting Senior Fellow at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore. The former Singapore Foreign Service Officer previously served with the United Nations in Timor-Leste for several years.]

Source: http://www.eurasiareview.com/28032018-timor-leste-australia-maritime-boundary-treaty-victory-for-dili-analysis/

Australia and Timor Leste: the 2018 Timor Sea Treaty

The Strategist - March 14, 2018

Donald Rothwell – The 2018 Timor Sea Treaty signed in New York between Australia and Timor Leste on 6 March 2018 is a landmark agreement between the two countries and provides a pathway for the final settlement of the continental shelf and exclusive economic zone (EEZ) maritime boundaries between the countries.

However, there remain a number of wildcards that could unravel the treaty that would only further deepen the distrust that has recently been evident in the bilateral relationship. Timor commenced compulsory conciliation against Australia under the 1982 UN Convention on the Law of the Sea in April 2016.

As this was the first time such a conciliation had been commenced under the convention's dispute settlement framework, all parties were uncertain as to the process and the outcome. Australia unsuccessfully challenged the competence of the Conciliation Commission, after which followed nearly 18 months of commission-facilitated discussions between the parties.

During that time, the commission's one-year mandate was extended by agreement. In the final months, there was also engagement with the Timor Sea oil and gas joint venturers who had existing commercial interests. That the commission was able to broker a treaty – which was not a certainty at the outset – is a vindication of the process and sets a precedent for conciliation being utilised to settle other law of the sea disputes.

Treaty negotiations were challenging because of some critical constraints. The first has been the legacy of the 2002 Timor Sea Treaty and a series of associated treaties between the parties. Under these arrangements a legal framework existed for the development of oil and gas fields in the Timor Sea, and also for the Greater Sunrise field located in the northeast of an agreed joint petroleum development area. Four Greater Sunrise joint venturers had legal interests that needed to be accommodated in the new treaty: Woodside, Shell, Conoco Phillips and Osaka Gas.

Second, the 2018 boundary had to be shoehorned into an existing set of boundaries Australia had settled with Indonesia. One of these is the 1972 continental shelf boundary delimiting the seabed either side of East Timor that extended Australia's sovereign rights far north into the Timor Sea. Another is the 1997 Perth Treaty governing the continental shelf and EEZ to the south of Java and west into the Indian Ocean.

The 2018 treaty provides for a permanent maritime boundary governing all of the disputed area of the Timor Sea based on a median line between the opposite Australian and Timor coasts, with two connecting lateral lines to the east and west that run north to intersect with the 1972 Australia – Indonesia continental shelf boundary lines. In a novel departure from traditional maritime boundary practice, the outer limits of the east and west lateral lines may be adjusted pending the outcome of future maritime boundary negotiations between Timor and Indonesia. Such an adjustment would only occur when the boundary was finalised or once oil and gas deposits in the area have been depleted, whichever is the latter.

The treaty also bars any Timorese claims against Australia arising from past exploitation of seabed areas now within Timor's area of sovereign rights. This is relevant in the case of the existing oil and gas fields. Dealing with the Greater Sunrise field has been the most challenging issue. The eastern lateral boundary has now been redrawn such that approximately 70% of the field is on the Timor side of the boundary. Because the field will draw from a common pool, a unitisation approach – that is, joint development – has been adopted until such time as it's depleted.

A revenue split favouring Timor 70/30 applies in the case that there's an onshore LNG plant in Timor, and 80/20 there's an onshore LNG plant in Australia. A floating LNG platform option has apparently been abandoned. These options for Greater Sunrise are another unique feature of the treaty and highlight the commercial choices being considered by the Greater Sunrise joint venturers.

Australia has indicated that it's neutral as to whether an LNG platform is in Timor or in Australia. Timor has a much larger stake in the decision due to the importance its negotiators have placed on developing an onshore LNG plant on Timor's east coast and the downstream benefits that would flow from it.

Notwithstanding the apparent success of the conciliation and the innovative aspects of the treaty, maritime boundaries in the Timor Sea and nearby waters still face an uncertain future. Development of Greater Sunrise is critical to Timor and could yield revenue in the vicinity of US$8 – 10 billion. Additional benefits flowing from an onshore LNG plant would be even greater. However, there have been strong indications that the Greater Sunrise joint venturers favour a LNG plant in Darwin, partly owing to technical difficulties associated with piping LNG across a significant seabed depression to Timor. Elections are also planned in Timor for May that could derail the treaty's ratification.

Finally, Indonesia may seek to reopen negotiations with Australia over the terms of the Perth Treaty as a means of seeking some equitable adjustment to Australian – Indonesian maritime boundaries in light of Australia's significant concessions to Timor in the Timor Sea.

The 2018 Timor Sea Treaty has rightly been praised as a significant breakthrough but there remains a number of critical issues to be resolved before maritime boundaries in the Timor Sea are finally settled. Author

[Donald R Rothwell is professor of international law at the ANU College of Law. Image courtesy of Department of Foreign Affairs and Trade.]

Source: https://www.aspistrategist.org.au/australia-timor-leste-2018-timor-sea-treaty/

Treaty signing brings measure of justice for East Timor

Melbourne Age Editorial - March 8, 2018

At long last Australia has done something like the right thing by East Timor in the dispute over the maritime boundary the countries share. But it has done so only after trying every other alternative for nearly five decades.

Australia's long-running disagreement over the boundary and the lucrative rights to the Greater Sunrise oil and gas fields – first with Portugal, then Indonesia and latterly with independent East Timor – has now concluded with the signing of a treaty.

The list of Australia's adversaries in the dispute goes some way to explaining its duration and its complexity.

When negotiations began in the 1970s to establish the seabed boundary between Australia and Timor, Australia had already signed an agreement with Indonesia settling the seabed boundary either side of East Timor.

Indonesia's foreign minister, Mochtar Kusumaatmadja, subsequently said that with that agreement Australia had "taken his country to the cleaners". Portugal, the colonial power in East Timor, was wary and put off negotiations.

After Portugal abandoned had its colony and Indonesia had invaded it, the disputed East Timor boundary, with its resources wealth, came up again. Indonesia was less accommodating. The result was the so-called Timor gap – in effect, a diplomatic agreement to disagree on where the boundary lay. An irregularly shaped patch of seabed territory constituted the boundary, and shared the wealth according to a complex formula that still favoured Australia.

When East Timor became independent in 1999, Australia wanted its new government simply to keep to the terms of the treaty it had inherited from Indonesia. The Timorese, quite reasonably, demurred, but Australia did its best to bully it aside.

Although the dispute's origin as a negotiation between Australia and a colonial power over the rights to mineral resources on the seabed perhaps explains Australia's initial aggression, subsequent developments including the birth of the new, and poor, independent East Timor, removed any justification for it.

Although it did make concessions, Australia has been trying, in effect, to wrest away as much as it can of East Timor's only serious source of national income. For a wealthy nation that aspires to be a leader in a relatively poor region, this has not been a good look. Although the pact ends the boundary dispute and resolves the Timor gap anomaly in Australia's seabed border, it does not settle everything.

One remaining question is the exact division of revenue from resources won from the sea floor in the zone. The agreement stipulates that if a pipeline is built from the Greater Sunrise fields to East Timor for processing, the revenue will be divided 70:30 in East Timor's favour. If the pipeline comes to Australia, where a plant already exists, the ratio would change to 80:20 for East Timor.

The difference reflects the gains to be expected from a processing plant for the country hosting it. When the issue comes up for decision, Australia should be more sympathetic to East Timor's interests than it has shown itself to be in the past.

Another reason to welcome the treaty is that it reaffirms the existing international rules for settling disputes about seabed boundary claims. The conciliation under the UN Convention on the Law of the Sea that produced the treaty is a first. For Australia's position on China's disputed territorial claims, this reassertion of the rule of law has been an essential step.

Source: https://www.theage.com.au/world/asia/treaty-signing-brings-measure-of-justice-for-east-timor-20180308-p4z3gn.html

Timor-Leste: architect of its own Sunrise

Inside Story - March 8, 2018

Michael Leach – When Timor-Leste terminated the CMATS treaty with Australia early last year, it overturned its fifty-year moratorium on boundary negotiations. Ending the decade-old agreement was essential to securing its objective of a permanent maritime boundary.

But the move wasn't without its risks. It placed other parts of the treaty in jeopardy, including a guaranteed 50 per cent share of royalties from the untapped Greater Sunrise field. Timor-Leste claimed that Greater Sunrise was substantially (if not completely) in its sovereign waters, and therefore it aimed to get a higher revenue share through new negotiations. Nonetheless, some Australian academics told a Senate committee last year that Timor-Leste had potentially become "the architect of its own demise" by renouncing CMATS and pursuing a permanent maritime boundary.

Their assessment was no doubt made in good faith: the risks of this bold legal strategy were real enough for Timor-Leste. What was more disturbing was how the Senate committee chair embraced the phrase, describing it as "tremendous... most enlightening. 'The architect of their own demise' is my favourite statement of the day." It was an extraordinary remark, given that the Australian government was in fact the architect of the quandary Timor-Leste found itself in. It was unable to pursue a binding maritime boundary decision though the international courts, because Australia had abandoned those jurisdictions weeks before East Timorese independence in 2002. The young nation was instead forced to trigger a non-binding but compulsory conciliation process under the UN Convention on the Law of the Sea, or UNCLOS. This was the first time this mechanism had been used.

It is clear now that the gamble paid off. Timor-Leste has secured a median-line boundary in the Timor Gap, creating a permanent maritime boundary for the first time. This places 100 per cent of the present Joint Petroleum Development Area in Timor-Leste's sovereign waters, where the prior treaty divides the revenue from existing fields, such as Bayu-Undan, 90-10 in its favour. But with these fields nearing the end of their lives, the as-yet-untapped Greater Sunrise field, worth in excess of $40 billion, has far more significance. Timor-Leste has also achieved a major increase in royalties from this field, up from 50 per cent under CMATS to 70 or 80 per cent, depending on whether the pipeline goes to Timor or Darwin, respectively. While government revenues are only one component of the value, this potentially represents $8 billion to $10 billion in future revenue to Timor-Leste.

Until recently, most Australian foreign policy commentators assumed Australia would forever limit its negotiations to revenue-sharing arrangements, ruling out negotiations over permanent maritime boundaries. Yet this ground shifted rapidly. What caused the turnaround?

There were several factors. One was Labor's change of policy in early 2016, which committed a future government to renewed boundary negotiations and, if they failed, binding third-party dispute resolution. Though the Coalition government stuck to its determination not to revisit the boundary question, the opposition's position had an impact behind the scenes, shifting a previously bipartisan consensus.

The next factor was a product of Timor-Leste's bold legal strategy. When Timor triggered the compulsory conciliation, Australia was forced into an opening gambit to defend the CMATS treaty and its purported fifty-year moratorium on negotiations. This effort failed spectacularly; the five-judge panel (including judges appointed by Australia) found that Australia's obligation under international law to negotiate a maritime boundary in good faith had survived the treaties with East Timor.

Once the boundary moratorium was found to be ineffective, Australia had no further use for CMATS and acceded to its termination. This dealt a fatal blow to the decades of Australian foreign policy that had sought to delay maritime boundaries until the oil and gas reserves were depleted, because Australia knew its favoured "continental shelf" position, reflected in the 1972 border with Indonesia, was now out of favour under international law.

Australia therefore faced the prospect of an UNCLOS conciliation report that was not binding, but was likely to be highly critical of its position under international law. Australia could have attempted to tough this out, as it had in the past, but other international realities were changing the calculus. In particular, the Australian government's calls for China to abide by the umpire's decision in the South China Sea dispute were becoming increasingly difficult to reconcile with its own refusal to negotiate maritime boundaries with Timor-Leste.

This turned the Timor Sea dispute into a major diplomatic liability, not least as Australia attempted to defend allegations of espionage. Pressure then came from the United States in the form of the US House Armed Services Committee's National Defense Authorization Act, which was specifically amended to encourage resolution of the boundary dispute. The compulsory conciliation process also saw confidence-building measures adopted by both sides, with Australia relieved to see the separate espionage case dropped. Negotiations then proceeded in good faith and in a timely fashion.

Though the final location of downstream processing of oil and gas is yet to be resolved, the outcome represents a major victory for Timor-Leste's strategy of using the UNCLOS compulsory conciliation mechanism, and a vindication of the role of international law in resolving disputes. The treaty text revealed yesterday brought relatively few surprises, with the new maritime boundary placing much of Greater Sunrise (roughly equivalent to the country's 70 or 80 per cent revenue share) in East Timorese sovereign waters. Some lateral or side boundary segments are provisional, pending the location of future laterals established between Indonesia and Timor-Leste in their sovereign waters north of the renegotiated area; but these can only be altered after oil and gas deposits are depleted.

At the moment of victory, however, there is a strong sense that the dispute will continue in another form, with chief negotiator Xanana Gusmao unhappy at the failure to secure a pipeline to the Timorese coast, a development vision he has championed for years. While this vision of a south-coast oil and gas processing hub doesn't unite East Timorese in the same way as the campaign for permanent maritime boundaries has, Gusmao remains a hugely powerful figure and his words will influence many. Despite this, the treaty represents a major victory for international law in our region and marks the end of a key stumbling block in the Australia-Timor-Leste relationship.

Source: http://insidestory.org.au/timor-leste-architect-of-its-own-sunrise/

Bullied relations: Aus, East Timor and natural resources

Scoop - March 8, 2018

"The Commission instead opted for the easiest way out, which is a shame as in my perception it reveals a lack of impartiality on your behalf!" – Chief East Timorese negotiator, Xanana Gusmao, Feb 28, 2018

Binoy Kampmark – In the scheme of things, Australia has deputised as regional bully for imperial powers since it became an outpost of the British empire. Neighbouring states have been ridiculed, mocked and derided as sub-human and incapable. The term "failed state" is still used in Canberra's circles of presupposing power over desperate basket cases. Little wonder that China smells a wounded reputation.

It is in that spirit that signing of an agreement between Australia and East Timor to demarcate maritime borders took place. Officially, there were smiles, even a sense of back slapping. The March 7 press release from Foreign Minister Julie Bishop conveys the moment of false elevation:

"The treaty is a historic agreement that opens a new chapter in our bilateral relationship. It establishes permanent maritime boundaries between our countries and provides for the joint development and management of the Great Sunrise gas fields."

The story behind the rubbing and flesh pressing was more questioning. The countries had, after all, reached this point after allegations of espionage threatened to scupper talks. Those allegations pertained to efforts on the part of the Australian Secret Intelligence Service to spy on East Timorese delegates during negotiations of the 2006 CMATS (Certain Maritime Arrangements in the Timor Sea). Where the division of revenue is concerned – in that case, the Greater Sunrise gas field in the Timor Sea – the spooks will follow.

The central points of historic contention between the states remain traditional: natural resources and how best to harness them. Neither could quite agree on who should have access to oil and gas reserves in the Timor Sea. The political imbroglio had its genesis in the 1989 Timor Gap Treaty signed between Australia and Indonesia when President Suharto's kleptocracy, not to mention brutal suppression of East Timor, were deemed acceptable matters of realpolitik.

The subsequent liberation of East Timor left the fledgling state in a parlous, near-death state. Indonesia and Australia continued to share the resources of the Timor Gap in gluttonous merriment till the signing of the Timor Sea Treaty. The document had one glaring flow: the lack of a determined permanent maritime border. CMATS, which East Timor duly tore up, permitted an equal division of revenue, but similarly postponed the discussion of a maritime border.

Central to the Timor-Leste strategy was a determination to do it by the international law book. East Timor argued for a maritime border lying half way between it and Australia; Australia, that it follow its continental shelf. The Permanent Court of Arbitration, and Conciliation Commissioners, were duly engaged in applying the UN Convention on the Law of the Sea. Australia subsequently celebrated the outcome as "the first ever conciliation under [UNCLOS]."

While students of international law cheered the result, the political dimension proved uglier. East Timor's chief negotiator and all-round resistance figure Xanana Gusmao lashed Australia and the Commissioners in a letter to the Conciliation Commission.

The Commission, he argued, were ignorant on East Timorese matters. The "chosen technical expert does not have appropriate experience or understanding from working in Timor-Leste or similar developing country contexts." Their assessments on "potential benefits to the Timor-Leste population" were "shockingly superficial", a point that only advantaged Australia.

Gusmao also had another gripe: Australian negotiators had seemingly been gotten to by the extractive industry heavies, Woodside Petroleum and Conoco Philips. "Civil society could potentially perceive this as a 'form' of collusion between the Government of Australia and Darwin LNG Partners and/or the Sunrise J."

That the officials of Timor-Leste should harbour obstinate suspicions is not only understandable but sagacious. To deal with a repressive, sanguinary Indonesian military was painful enough. But then came international knowledge about the brutal regime operating in East Timor, knowledge that came precariously close to active complicity. Fraternal talk tends to be counterfeit in the market of geopolitics.

The 2,500 page Commission for Reception, Truth and Reconciliation in East Timor, transmitted by Gusmao, then East Timorese president, to the national parliament in November 2005 referenced hundreds of illuminating formerly classified US and British documents. These showed tacit approval by both the US and UK for the invasion of East Timor in 1975 and the status quo till 1999, during which some 100,000 Timorese died.

There were even open instances of Indonesian officials showing interest, as a National Security Council memorandum to US Secretary of State Henry Kissinger states, "in knowing the American attitude regarding Portuguese Timor (and, by implication, our reaction to a possible Indonesian takeover)." They were not disappointed.

As late as 2014, the Australian government would go to considerable lengths to prevent the release of files pertaining to Canberra's knowledge of Indonesian troop deployments during the occupation. Of particular sensitivity were operations conducted in late 1981 and early 1982 which ended in predictable massacre. In a decision by the Administrative Appeals Tribunal agreeing with the government, President Justice Duncan Kerr claimed with Kafkaesque absurdity that he had to "express conclusions which I am unable to explain".

What the justice did reveal was a tantalising titbit on the regional bullying East Timor has been subjected to at the hands of murderous and occasionally complicit powers. Evidence submitted to the Department of Foreign Affairs and Trade revealed a certain insistence on the part of US authorities in 2013 wanting "the Australian government to continue to restrict access to... four documents" with "ongoing sensitivities".

East Timor remains a state on a drip. It is impoverished. Despite all this, the Australian preference remains determined and exploitative. The issue on where the oil and gas will be processed continues as a niggling sore point. Canberra prefers that piping take place through Darwin, with an 80 percent revenue sweetener to East Timor.

That will hardy pass muster for Dili, which sees value in having the processing facility in East Timor, where a "petroleum hub" is being developed. To that end, it is even willing to surrender a revenue cut to Australia. Power machinations, and Australia's petroleum lobby, may well yet undo these arrangements. The regional bully remains renascent.

[Dr. Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne.]

Source: http://www.scoop.co.nz/stories/HL1803/S00055/bullied-relations-aus-east-timor-and-natural-resources.htm

People of East Timor misled over Sunrise oil and gas

Forbes.com - March 7, 2018

Damon Evans – Findings from UN-backed Conciliation Commission show development of Greater Sunrise oil and gas in East Timor is unviable, contrary to what East Timor's government claims.

In a letter to the UN-backed Conciliation Commission tasked with resolving a long-running maritime boundary dispute between East Timor and Australia, East Timor's leaders appear to misunderstand the importance of timing regarding the development of the Greater Sunrise oil and gas fields.

In the letter leaked to ABC News, East Timor accuses Australia of colluding with oil companies to ensure oil and gas from the Greater Sunrise fields, which straddle the Australian and East Timorese seabed, is piped to northern Australia for processing, instead of to East Timor.

East Timor also asserts that the Woodside Petroleum-led joint venture, which has the rights to develop the Greater Sunrise oil and gas fields, fabricated a false deadline for the agreement on a single development concept, which if not met, meant the fields would never be developed.

This "window of opportunity" the letter refers to relates to the opportunity to reuse, or backfill, an existing gas processing facility operated by US oil company ConocoPhillips in Darwin, northern Australia.

This facility currently freezes gas into liquefied natural gas, known as LNG for short, so that it can be shipped to gas hungry-nations, such as Japan, South Korea and China.

In recent years, as export projects started up in Australia and elsewhere, the global market has been swamped with LNG. As a result, no new projects have been approved, as there was more supply than demand. But existing LNG producers, such as Qatar and Papua New Guinea, are now racing to approve expansions to existing facilities to meet an expected shortfall in supply post-2023.

Expansions of existing projects are more competitive than building a completely new project, such as the one East Timor proposes at Beaco on East Timor's southern coast. Understandably, buyers in Japan and China want the best deal possible on new supplies. This is what expansions, of existing projects in Qatar, Papua New Guinea and Australia, offer. New build projects, that cost more money to build, as investors have to start from scratch, cannot compete with expansions of existing projects. It's pretty logical.

Now, East Timor's only producing oil and gas field, Bayu Undan, which supplies the existing Darwin LNG export facility, is expected to run dry by around 2022-23. The operator of the Bayu Undan field, ConocoPhillips, needs to find new supplies to feed this export plant from 2023. Demand for LNG is expected to exceed supply from around 2023-24 so it's the perfect time for the US major to market new gas supplies.

But it usually takes four or five years to develop new fields. Engineering studies need to be done, wells need to be drilled, pipelines laid etcetera. So, ConocoPhillips, and its partners need to take investment decisions soon, so that they can take advantage of the expected shortfall in global supplies post 2023 and make money. After all, like it or not, that's why the oil companies are in business, to make profits.

So this "window of opportunity" was not fabricated. Any LNG expert or research consultancy across the globe will tell you about it. It's plain to see.

Understandably, East Timor is upset because the Conciliation Commission, did not validate their insistence that a new LNG export plant be built in East Timor.

The Commission cites independent analysis that proves proposals for the Timor LNG project, by East Timor's national oil company, TimorGap, are not economically viable.

"The Commission anticipates that, under currently expected market conditions, TimorGap's concept would generate a return in the order of 7% on a capital investment of $15.6 billion. This would not be sufficient to meet the industry standard for investment by an international oil company," it reported on 6 March after the signing of the new Maritime Boundaries Treaty between the Australia and East Timor.

It added, that TimorGap's proposal could be done, but only with a direct subsidy of $5.6 billion by the government of East Timor or another funder. That's nearly a third of East Timor's sovereign wealth fund.

Conversely, the analysis shows that sending Greater Sunrise gas to Darwin is commercially attractive. It's a no brainer really. The Woodside-led joint venture, which includes ConocoPhillips, Shell and Osaka Gas, could reuse the existing pipelines from Bayu Undan and existing export plant in Darwin. Greater Sunrise gas could then compete with expansions in Qatar and Papua New Guinea for new customers post 2023. But that's just five years away. So the "window of opportunity" is real as it would take between five and seven years to get engineering studies finished, regulatory and investment approvals, as well as actually develop Greater Sunrise, if all stakeholders hypothetically agreed on commercialising Greater Sunrise using the existing facilities for Bayu-Undan.

If Dili does not want to play ball, then the oil companies will just backfill the Darwin LNG export plant with gas from other fields. In this instance it's hard to see Greater Sunrise being developed in the next ten years, if at all. To develop Sunrise would mean building another LNG export facility in Darwin, which would be less competitive than using the existing depreciated plant. Or East Timor will need to stump up nearly $6 billion itself to build a new LNG plant on its shores, as well as find a competent LNG developer to do this. And then Dili would probably not get any profits.

If East Timor accepted the Darwin option it will get 80% of the royalties from production, as oppose to 70% if the resource were developed in East Timor. That extra 10% is worth $3.1 billion to $3.5 billion, reported the commission. Certainly, better than 70% of nothing.

It's interesting that many of the reports carried out by leading energy experts on the viability of Timor LNG, commissioned by the government, have all been buried. This report by leading energy consultancy Poten & Partners commissioned by the CNRT-led government some seven years ago concluded the commerciality of Timor LNG was marginal at best, while the socio-economic benefits for East Timor paled in comparison to the overall level of capital investment required. It also said the Timor option was fraught with technical risks.

Wood Mackenzie, another leading energy research firm has a less than optimistic view on Timor LNG. Earlier this year a former Wood Mackenzie analyst told me that due to uncertainty about how the resource is likely to be developed, the company does not expect Greater Sunrise to be developed until the late 2020s.

The analyst told me the most likely development scenario would be via the Darwin LNG plant. But, he said ConocoPhillips and its partners are much closer to starting engineering works for its Barossa field, which would backfill Darwin LNG, instead of Sunrise. They are targeting production from Barossa in 2023.

In Wood Mackenzie's view the gas resource at Greater Sunrise is among the best in the region and development would probably have progressed by now if not for the political uncertainty. While Barossa will be more expensive to develop compared to Sunrise, it is more attractive because unlike Sunrise it is not mired in politics and there will be no delays in developing the resource to meet the projected market shortfall in 2023.

So in summary, there will be no LNG project in East Timor, unless East Timor goes it alone. And there would be no royalties, just losses. Developing Greater Sunrise in East Timor makes no commercial sense. Even if the whole field sat in East Timor's sovereign territory the government would be hard pushed to find investors to back its Timor LNG proposal, let alone come up with a direct subsidy of $5.6 billion for the development. The numbers simply do not add up.

Maybe it's time the political elite in Dili put their egos aside, otherwise there really will be no development of Greater Sunrise. That "window of opportunity" will close, if it hasn't already. After all, investors crave certainty and recent experience shows that East Timor cannot deliver that yet.

[Damon EvansDamon is a consultant, editor and journalist based in South East Asia. Opinions expressed by Forbes Contributors are their own.]

Source: https://www.forbes.com/sites/damonevans/2018/03/07/gusmao-misleads-people-of-east-timor-over-sunrise-oil-and-gas/#6d40ffb68c32

Australia and Timor Leste settle maritime boundary after 45 years of bickering

The Conversation - March 7, 2018

Donald R. Rothwell – After nearly two years of a facilitated conciliation process initiated under the 1982 United Nations Convention on the Law of the Sea, Australia and Timor Leste have finally reached agreement on a maritime boundary in the Timor Sea.

The treaty, signed at the UN in New York by Australian Foreign Minister Julie Bishop and Agio Pereira for Timor, will enter into force once all relevant domestic processes have been completed in Canberra and Dili.

This is the latest development in the saga of the Timor Sea, which has been contested for more than 45 years by Australia, Portugal, Indonesia and Timor Leste.

Ownership and control of significant oil and gas reserves, some of which remain undeveloped, are at the centre of the dispute. This partly explains why, despite previous treaties, there has never been a conclusive settlement of the maritime boundary.

The 2018 treaty seeks to permanently settle the Australia/Timor Leste maritime boundary, albeit with the potential for future adjustments subject to negotiations between Timor and Indonesia.

A long time coming

Since the 1970s, Australia has been engaged in negotiations first with Portugal, then Indonesia, and finally Timor Leste over the maritime boundary. Portugal rebuffed Australian approaches in the early 1970s, mindful of developments in maritime law that promised them a better deal.

Indonesia, which occupied Timor from 1975, was more willing to negotiate. A joint development zone was agreed on that broadly shared oil and gas revenue on a 50/50 basis, but set aside a permanent maritime boundary for future settlement.

That arrangement collapsed following Indonesia's 1999 withdrawal from Timor, and was replaced in 2002 by the Timor Sea Treaty between Australia and the newly independent Timor Leste.

However, the Timor Sea Treaty was again based on a joint development regime – though with a 90/10 revenue split in favour of Timor – and negotiations on a permanent maritime boundary were set aside for up to 40 years.

The treaty also did not satisfactorily deal with the Greater Sunrise oil and gas field in the north east quadrant. While a subsequent 2003 unitisation agreement sought to provide some commercial certainty for the multinationals wanting to develop the field, Dili remained firmly of the view that it was getting a bad deal.

In particular, the generation of Timor's leaders who led its independence movement placed great importance on the new country having settled land and maritime borders. That the Timor Sea boundary with Australia was not settled remained contentious in Dili. The situation was exacerbated by allegations of Australian spying during treaty negotiations and a Greater Sunrise revenue split that favoured Australia.

Key features

The 2018 treaty contains six prominent features. First, it provides for a southern boundary between Timor Leste and Australia that approximates a mid-way between relevant coastal features. This is consistent with the modern law of the sea.

Second, there is a straight line western lateral boundary that runs from the western terminus of the 1972 Australian Indonesian Seabed Boundary south to the median line.

Third, the eastern lateral boundary comprises a number of segments that extend much further to the east and north east than the 2002 treaty, ultimately giving Timor Leste much greater entitlements over the Greater Sunrise field.

Fourth, a Greater Sunrise Special Regime is created in which the two countries agree to share the upstream revenue either on a 80/20 basis in favour of Timor, if processing occurs by way of a pipeline to an Australian LNG processing plant, or 70/30 in favour of Timor if a pipeline runs to Timor.

Fifth, Timor gains 100% access to the future upstream revenue of the existing oil and gas fields that were previously part of the 2002 Joint Petroleum Development Area.

Finally, taking into account these new arrangements will ultimately need to accommodate any maritime boundaries that Timor may negotiate with Indonesia, there is some capacity for adjustment of the eastern and western lateral boundary lines, though only after the commercial depletion of seabed resources in the area.

Unique, but still unresolved

The conciliation process has yielded a unique treaty. It is the first of its type that not only involved the two states, but also the Greater Sunrise Joint Venture partners, including Woodside, Conoco Phillips, Shell, and Osaka Gas.

Timor initiated the conciliation, engaging an independent third party in an effort to break the maritime boundary impasse. It succeeded in getting Australia to abandon its long held opposition to a permanent Timor Sea maritime boundary, and has been able to substantially modify the development regime for Greater Sunrise.

Notwithstanding these achievements, some matters remain unresolved, including the location of the LNG processing plant. Whether the plant is located in Australia or Timor is ultimately a commercial decision, but could become the source of ongoing bickering given the significant downstream benefits at stake and implications for Timor's economic future.

[Donald R. Rothwell is a professor at the ANU College of Law, Australian National University.]

Source: https://theconversation.com/australia-and-timor-leste-settle-maritime-boundary-after-45-years-of-bickering-92834

Timor Gap: a boundary, yet disputes linger

The Interpreter - March 7, 2018

Clive Schofield – The signing of a treaty between Australia and Timor-Leste marking maritime boundaries in the Timor Sea represents a huge step forward in resolving the two states' long-standing disputes.

The conciliation process that led to the agreement was groundbreaking for being the first time such an approach has been used under the UN Convention on the Law of the Sea.

This is not, however, the end of the story, despite recent media reports to the contrary. In fact, Timor-Leste and Australia has not fully resolved the Timor Sea dispute for three key reasons.

More negotiations flagged

First, the new treaty defines boundaries distinct from the limits of the existing joint petroleum development area (JPDA), which will cease to exist once the new treaty comes into effect. This zone (see map) was defined under the Timor Sea Treaty, signed between Australia and Timor-Leste on the day the latter gained independence.

The boundary between opposite coasts in the central part of the Timor Sea is a fairly conventional "single" maritime boundary broadly consistent with the median line defining the exclusive economic zone (EEZ) and continental shelf rights. While it is favourable to Timor-Leste, the new treaty offers little material benefit.

It does, however, represent a notable symbolic victory for Timor-Leste, which has long campaigned for the adoption of a middle line in the Timor Sea. The boundaries had become increasingly politicised and linked to "sovereignty" and identity, representative of Timor's statehood and independence. Map: Department of Foreign Affairs and Trade

Importantly, the lateral lines of the new agreement connect with the pre-existing 1972 continental shelf boundary between Australia and Indonesia. This means that Australia and Timor-Leste's new boundary arrangements do not prejudice Indonesia's rights or jeopardise Australia's existing boundaries with Indonesia.

Taking a highly innovative approach, Australia and Timor-Leste have devised the lateral boundary lines in such a way that they are capable of adjustment in the future. This will only occur should Indonesia and Timor-Leste reach agreement on widening Timor-Leste's "window" on the Timor Sea, thus redefining the Timor Gap. Any such readjustment will also only take place once the resources of Greater Sunrise have been exploited, in an arrangement designed to provide certainty to the oil companies involved. This means that future negotiations may need to occur.

Indonesia waiting

Second, Timor-Leste has yet to strike an agreement on its maritime boundaries with Indonesia. Portions of the lateral lines in the Timor Sea nearer Timor-Leste's shore need to be settled, and also potential boundary lines between the northern coast of Timor-Leste and Indonesian islands across the Wetar Strait. Additionally, Timor-Leste's Oecusse enclave, surrounded on the landward side be Indonesian west Timor, but with a coastal front to the north onto the Ombai Strait is likely to be a tricky issue in negotiations, situated as it is within Indonesia's archipelagic baselines.

Although bilateral boundary negotiations were initiated in late 2015, agreements are yet to be concluded. Even if all of Timor-Leste's maritime boundaries are settled, ongoing cross-boundary cooperation will be necessary to ensure good oceans governance and regional peace and security.

Greater Sunrise unresolved

Third, and most critical for Timor-Leste economically, is the issue of the actual development of the lucrative Greater Sunrise complex of fields, and how its revenues will be split. This is key to Timor-Leste's economic future. Here, the agreement contemplates different "development concepts", including whether the pipeline from Greater Sunrise goes to Australia or Timor-Leste – a decision which will inevitably impact on benefits downstream.

If the pipeline runs to Timor-Leste, the country would receive 80% of government revenues arising from the development. If the destination is Australia, Timor-Leste would receive 70% of proceeds from Greater Sunrise. Either way, this represents an improvement for Timor-Leste on the 50/50 split outlined in the previous Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS).

But the critical decision about the destination of the pipeline remains unresolved. The new agreement means this is less a bilateral negotiation between Australia and Timor Leste, and more a complex multiparty negotiation between these states and a consortium of oil companies.

For the past decade, Timor-Leste's politicians, led by former Prime Minister Xanana Gusmao, have advocated for Greater Sunrise gas to be piped to the south coast of Timor-Leste for processing. However, the Woodside-led consortium, which holds rights over Greater Sunrise, has indicated that this is not a commercially viable option. The task for Timor-Leste's negotiators now is to persuade reluctant industry partners to relent on the course of the pipeline.

The Woodside consortium's primary responsibilities are not to citizens or the broader international community, but to its shareholders. In the past, Woodside has been more than prepared to shelve the project. It is not clear whether the development of Greater Sunrise, which potentially involves the construction of a technically challenging and expensive pipeline across the Timor Trough to Timor-Leste, is an attractive option for development, or whether the timing fits with Timor-Leste's need for the gas to flow and resulting profits to replenish its dwindling sovereign wealth fund.

Dwindling funds

It is hard to overstate how consequential the timely development of Greater Sunrise is for Timor-Leste's economy. More than 90% of its national budget comes from oil in fields that will be depleted in less than five years. It has very few sources of non-oil income, and its petroleum fund won't last ten years on current spending.

This lack of diversity in the Timorese economy has meant that Timor-Leste continues to rely on unlocking Greater Sunrise revenues. As commentators have observed, even if this happens, what the revenue split means in real terms for Timor-Leste is uncertain. If the country receives 80% of the US$40 billion field, the royalties to Timor-Leste are only likely to be approximately US$8.16 billion.

The issue of the boundaries as a matter of sovereignty, while symbolically important, is a distraction from the core consideration. What really matters for Timor-Leste's sovereignty and its economic viability is a quick resolution on the pipeline, leading to a swift development of the fields. The parties have still not come to an arrangement about how the gas from Greater Sunrise will be processed. A leaked letter from Gusmao, who led the negotiations, has accused Australia of colluding with the oil corporations to prevent the pipeline. This suggests that the Timor Sea dispute is far from over.

The new agreement is the product of an intense negotiation, facilitated by the Conciliation Commission. But negotiating with oil corporations driven by profit is an entirely different proposition. It is to be hoped that the Conciliation Commission's report, due out mid-April, will offer pathways for the development of Greater Sunrise. However, an overly aggressive negotiating strategy runs the risk of pushing back the development of Greater Sunrise, with disastrous implications for Timor-Leste's economy, and ultimately its viability as a state.

Source: https://www.lowyinstitute.org/the-interpreter/timor-gap-boundary-yet-disputes-linger

New Timor treaty will finally set permanent boundaries to resolve oil and gas

Right Now - March 6, 2018

Tom Clarke – East Timor and Australia will sign a maritime boundary agreement at the UN headquarters in New York tomorrow, putting their long-running border dispute to rest.

Although the finer details of the treaty remain under wraps, all reports suggest that the Timorese will secure their permanent maritime boundaries and a fairer share of government revenues from the Greater Sunrise gas field.

Such an outcome will be testament to the determination of the Timorese people and their governments to stand firm in the face of a neighbouring bully and claim their sovereign rights. This debate has never been about charity, it's always been about justice and what the Timorese are legally entitled to.

Australia, the bully

Successive Australian Governments, wanting to keep the riches of the Timor Sea to themselves, have deliberately and persistently frustrated East Timor's attempts to establish permanent boundaries.

Even though all of the oil and gas fields contested over the years are located closer to Timor than to Australia, our Government has doggedly tried to short-change the Timorese at every opportunity.

After Australia had unilaterally tapped the Laminaria Corallina fields – without the Timorese receiving a single cent, it jostled Timor into a temporary resource-sharing agreement, the Timor Sea Treaty, that allowed it to take a slice of the revenue from the Bayu-Undan fields, which were the fledgling nation's most important source of revenue.

Australia then set its sights on the massive Greater Sunrise gas field. Its initial proposal was to allow Timor a miserly 18 per cent of the government revenue.

The prevailing legal consensus is that if permanent maritime boundaries were established in keeping with current international law, then most, if not all, of the field would be located within East Timor's exclusive economic zone.

This debate has never been about charity, it's always been about justice and what the Timorese are legally entitled to.

But international law was of little relevance to Australia. Just two months before East Timor became independent in 2002, the Australian Government withdrew its recognition of the maritime boundary jurisdiction of the International Court of Justice. Put simply, the Australian Government turned its back on the independent umpire signalling that it had no intention of playing by the rules.

So despite East Timor wanting to establish permanent maritime boundaries, in 2006 the Australian Government managed to walk away with another "temporary" agreement. This one, CMATS, would postpone for 50 years discussions about sovereignty – ie. which nation actually owns the area – and would see the government revenue from Greater Sunrise split 50/50.

Exactly how Australia managed to get such a deal was exposed in 2013 when a senior intelligence officer revealed that an AusAid project was used as a cover to bug the Timorese cabinet room during the negotiations.

The Timorese Government was understandably upset and triggered a conflict resolution mechanism set out in the Timor Sea Treaty, to prompt mediation in The Hague. But just days before the meeting was to take place, an ASIO raid was ordered on the Canberra offices of Timor's legal team and the passport of "Witness K" was seized preventing him from travelling to The Hague to present evidence.

This allowed Timor to take legal action against Australia and in a provisional judgement, the International Court of Justice slammed the heavy-handed actions and issued an unprecedented order for the Australian Government to stop interfering with Timor's communications.

With the upper hand in what would have been a long and embarrassing legal battle for Australia, Timor finally had some bargaining power. But in an extraordinary act of good faith, Timor traded that away – it withdrew its case in return for Australia agreeing to return to the negotiating table to discuss permanent boundaries. But true to form, Australia soon reverted to its belligerent tactics and the talks were on a road to nowhere.

Eventually in 2016 with no where else to turn, the Timorese launched a "compulsory conciliation" procedure at the UN. This is a mechanism that had never been used before and exists specifically for when one country refuses to recognise the jurisdiction of the independent umpire that would normally settle such disputes.

The Australian Government's long held stonewalling tactics began to crumble after its undignified attempt to wriggle out of the process was soundly rejected by the UN-constituted commission.

The new treaty

The resulting treaty will set a permanent boundary along the median line halfway between the two coastlines. This is great news, but the exact placement of the all-important lateral, or side, boundaries which will determine the scope of Timor's exclusive economic zone, is still unknown.

Recent media reports claim the treaty will give a much larger share of the government revenue from the Greater Sunrise field to Timor: 80 per cent if the gas is piped 450 km to Darwin for processing where Australia will reap the downstream economic benefits of jobs and related activities, or 70 per cent if the gas is piped 150 km to East Timor.

Even if the new treaty turns out to be less than ideal in regards to the size of Timor's sovereign territory, it gets the job done in that it delivers what the Timorese have always wanted – permanent maritime boundaries – and it appears that the revenue share reflects the likely outcome had the maritime boundaries been set in keeping with contemporary international law. It seems that it has also managed to do so without Australia having to concede territory it hadn't already conceded to Indonesia in 1972. So the politicians on both sides of the Timor Sea have saved face.

Whatever devils might be in the detail, there is little doubt that this new treaty will be a far better deal for East Timor.

This is a big win for the Timorese and also a reminder of the importance of the UN's peaceful arbitration processes. It's also a win for the Australian citizens who stood up in solidarity with the Timorese people to demand that our Government do the right thing. It's been a long time coming.

Source: http://rightnow.org.au/opinion-3/new-timor-treaty-will-finally-set-permanent-boundaries-resolve-oil-gas-dispute/

Edging closer to a just regime in the Timor Sea

Eureka Street - March 4, 2018

Frank Brennan – On Tuesday the governments of Timor Leste and Australia will sign a maritime boundary treaty in New York in the presence of Antonio Guterres, the Secretary General of the United Nations. This day has been a long time coming.

It will be a day of great celebration for the Timorese, especially their leaders Xanana Gusmao and Agio Pereira. They've taken a big gamble and it seems to have paid off. They have not come away with all they wanted, but they have secured a legal framework for the development of the oil and gas reserves in the Timor Sea more favourable than any previous framework on offer.

Having fought hard to maintain the previous framework, the Australian negotiators have acted honourably, and their political masters have been sensible agreeing to the new framework. The Timorese and Australian negotiators have taken boundary delimitation as far as possible without having the Indonesians at the table to help finalise the maritime boundaries at those points in the Timor Sea where all three countries have an interest.

Basically the Timorese and Australian negotiators and their political masters have taken the boundary agreement as far as they can without infringing on Indonesian concerns. Some of the agreed boundary lines will need to be provisional, awaiting Indonesian agreement at the edges where all three countries have an interest.

Not everyone will be happy with the deal. Some of the Timorese, as well as some of their more strident Australian supporters, will continue to be upset that the agreed maritime boundary does not place the whole of the Greater Sunrise deposits of oil and gas within Timor's exclusive jurisdiction. The critics will think that Gusmao has traded sovereignty for revenue.

The deal is complex. The details of the border will be known this week but the details of the Special Regime for Greater Sunrise and the pathway for the development of the resources will not be known for some time to come. There's still plenty of room for mistrust and misunderstanding. We Australians must avoid a repetition of the mistakes of the past and we need to maximise the prospects for prompt development of Greater Sunrise.

Once signed, the treaty will need to be ratified. Before it can be ratified at the Australian end, the treaty needs to be considered by JSCOT, the Australian Parliament's Joint Standing Committee on Treaties.

"This new treaty does not provide all the answers. But it's a better basis for good neighbourly behaviour in the Timor Sea than what went before."

When the previous CMATS Treaty was signed in 2006, Foreign Minister Alexander Downer claimed there was no need for full JSCOT scrutiny because the treaty was urgent and sensitive, involving significant commercial interests. Even the JSCOT members from the government side took exception to Downer's high-handed actions joining with their fellow committee members saying:

'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.'

It would be a very serious mistake for Julie Bishop to try and shortcut the JSCOT processes this time around. Back in 2006, the CMATS Treaty (on Certain Maritime Arrangements in the Timor Sea) enjoyed strong support from the Timorese leaders. But the disaffection of community groups finally carried the day, with the Timorese leaders ultimately disowning the deal and seeking a new one. As was the case back in 2006, Timor Leste is presently in a time of some political uncertainty with the president having called fresh elections trying to resolve parliamentary deadlocks and breakdowns. The election in Timor will be hard fought and is not due until May.

Once JSCOT gives everyone a chance to have their say on the new treaty at the Australian end, and presuming that JSCOT recommends ratification of the treaty, the Australian government should then act promptly to ratify.

For years, the simple message of the Timorese campaigners in Australia has been that Australia should agree to a median line between Australia and Timor Leste. The median line running east-west has not been the major problem. It's been agreed for some time. The sticking point has been the eastern lateral line running north-south which cuts through Greater Sunrise. The Timorese have long claimed that this lateral line should be drawn to the east of Greater Sunrise, thereby placing the whole of Greater Sunrise within Timor's jurisdiction and beyond Australia's reach. The full length and the ultimate direction of this lateral line has to be drawn with Indonesia at the table because this line will divide the Indonesian and Timorese territorial waters 12 miles offshore and the contiguous zone 24 miles offshore.

Until now, the Indonesians have not been in any hurry to finalise their maritime boundaries with Timor south of the island of Timor. They would like first to finalise the boundaries on the north side of the island. Despite Timor Leste now being independent for 16 years, Timor Leste and Indonesia are yet to finalise their land boundaries, and that is a far simpler geographic exercise with minimal financial ramifications when compared with the negotiation of maritime boundaries in the Timor Sea. So, a final set of maritime boundaries in the Timor Sea is still a long way off.

When it comes to the proposed development of Greater Sunrise, the joint venturers seem to have gone cold on their insistence that FLNG (processing the gas on a floating platform out at sea) is the best option. So now, there will be a need to pipe the gas either to Timor or to Darwin. If piped to Darwin, the Timorese are to receive 80 per cent of the upstream revenue, and if piped to Timor, 70 per cent. That is a marked improvement on the 50 per cent proposed by CMATS and on the 20 per cent proposed in the earlier treaty arrangements. On this, the Timorese gamble has paid off big time.

The building of a pipeline across the Timor Trough and the development of the resource on the Timor mainland remains a cherished dream of Xanana Gusmao and many of those contesting the May election in Timor. No one knows whether this will ever happen, nor what the financial benefits would be. What's important is for the Australian government to get out of the way as soon as possible, allowing the Timorese to investigate all options with the present joint venturers and other prospective developers. Australians should be on hand to provide advice when asked. But gone are the days of using boundary negotiations or their delay as a means of pressuring a new developing nation to adopt one economic option rather than another for the development of a petro carbon resource. The Australian negotiators will need to be on standby for some years to come when the Timorese and Indonesian officials are ready to turn their gaze south of the island of Timor.

Mind you, if I were Timorese, I would need a lot of convincing that the jobs and training from onshore development of the Sunrise gas would be assured, offsetting the guaranteed 80 per cent upstream revenue flow which would come from piping and processing the oil and gas in Darwin. But I'm not Timorese. This new treaty does not provide all the answers. But it's a better basis for good neighbourly behaviour in the Timor Sea than what went before. Tuesday will be a day for all Australians and Timorese of good will to toast David who stared down Goliath in the Timor Sea.

[Frank Brennan SJ is the CEO of Catholic Social Services Australia.]

Source: https://www.eurekastreet.com.au/article.aspx?aeid=54729

Early elections test Timor-Leste's hard-earned stability

Asia Times - March 3, 2018

Giacomo Tognini – Timor-Leste will go to the polls on May 12 for the second time in less than a year, with the country's politicians calling upon voters to break a stalemate that ended almost a decade of hard-earned political stability.

Campaigning will officially begin on April 10, and the election is set to be hotly contested by the two opposing political camps that have consolidated ahead of the vote.

Led by Prime Minister Mari Alkatiri, Fretilin was the political wing of Timor-Leste's independence movement. After winning the most seats in legislative elections last July, it formed a minority government with the smaller Democratic Party, controlling 30 of the national parliament's 65 seats.

That government collapsed in December when the opposition Parliamentary Majority Alliance (AMP) voted against the government's program for the second time since July, forcing President Francisco Guterres to dissolve parliament. The AMP is composed of the National Congress for Timorese Reconstruction (CNRT), led by former prime minister Xanana Gusmao, and two smaller parties that won seats for the first time last July – the anti-corruption People's Liberation Party founded by former president Taur Matan Ruak, and the anti-establishment Khunto.

That alliance was made permanent ahead of the May elections under the new name Alliance for Change and Progress (AMP). Fretilin and the Democrats will campaign separately but may renew their coalition after the polls if they can form a majority.

"Elections in other democratic nations, like Germany and Belgium, have failed to produce sustainable governments in recent times," says Michael Leach, a professor in politics and international relations at the Swinburne Institute of Technology in Melbourne, Australia. "That said, the 2018 elections could prove a far tenser affair than the previous ones in 2017."

Political gridlock

In past times of crisis, Fretilin and the CNRT worked together in national unity governments to preserve political stability. After a contested election in 2007 led to riots and brought the country to the brink of civil war, the two parties formed a unity government led by Gusmao, who rose to fame as a pro-independence fighter during the Indonesian occupation from 1975 to 1998.

When Gusmao decided to step down in 2015 after eight years in office, the CNRT again formed a broader coalition with Fretilin. Rui Maria de Araujo took his place, with the younger politician signaling a shift away from the older generation of leaders that includes Gusmao and Alkatiri.

That deal was shattered in the aftermath of the July elections, with both men returning to the fray and leading the country down a more polarized path. Despite the heightened tensions, Timor Leste has come a long way from the political violence of 2007 and 2008, when assailants attacked the country's president and prime minister.

"The current political impasse cemented the idea that politicians can agree to disagree without having to resort to violence," says Claudio Providas, Timor-Leste country director for the United Nations Development Program (UNDP). "Politicians have also behaved responsibly, avoiding any provocations."

Black gold

Timor-Leste's economy has expanded at a rate of around 4-5 percent since 2012, but that remains a far cry from the double-digit growth rates the country recorded in earlier years. Positioned on the oil-rich Timor Sea that divides the island from northern Australia, the country is now close to earning the full potential of the riches that lie beneath its waters.

Timor-Leste and Australia will sign a treaty on March 6 to demarcate a maritime boundary between the two countries, finally settling a dispute that has roiled for decades over who owns the $30-45 billion worth of oil under the Timor Gap

Timor-Leste and Australia will sign a treaty on March 6 to demarcate a maritime boundary between the two countries, finally settling a dispute that has roiled for decades over who owns the $30-45 billion worth of oil under the Timor Gap. While the final details are still under wraps, Timor-Leste is expected to gain up to 70 percent of the revenues.

Gusmao led the country's negotiations for much of the agreement process, pushing for an on-shore processing plant on the country's southern coast to pipe in gas and provide much-needed jobs. That proposal is unlikely to succeed, but the CNRT leader is trumpeting his success on the campaign trail.

"This could see Timor-Leste's coffers increase substantially over the next two decades," says Leach. "Gusmao will likely see his success in maritime boundary negotiations with Australia as a powerful tool for campaigning for the AMP."

Allegations of corruption against the country's ruling class have multiplied as Timor-Leste's oil wealth has grown in recent years. Alkatiri and his family have been linked to kickbacks from the Houston-based oil company ConocoPhillips, while several politicians who served under Gusmao have been prosecuted and arrested for corruption.

The Timor-Leste Anti-Corruption Commission was established in 2009, but the legislature's failure to pass specific anti-corruption laws has forced the commission to rely on the public prosecutor's office to investigate its cases. A slow-moving judicial process for allegations against politicians, combined with pressure from the government, means that many cases never see the light of day.

"Preventing and resolving corruption is still a big problem in Timor-Leste," says Raimundos Oki, a Timorese journalist who was sued for defamation by former PM Araujo and found not guilty. "Some politicians have been accused by the public prosecutor's office but are still active in the current government."

The commission's first chairman is a co-founder of the PLP, which campaigned against corruption in last year's elections and became the country's third-largest party with eight seats. Along with Khunto, both parties tapped into public discontent directed at the allegedly corrupt governments headed by Fretilin and the CNRT.

With those parties now pitted against each other, it's up to Timorese voters to decide which side is more honest in the fight against corruption. The country's petroleum fund is depleting fast and could disappear entirely by 2026, a dire prediction for a small nation that desperately needs more funding to pursue its development priorities.

"There now seems little prospect of return to the power-sharing government," says Leach. "The AMP will be a formidable electoral force, and Fretilin has promised to take its government program to the people."

Source: http://www.atimes.com/early-elections-test-timor-lestes-hard-earned-stability/

Overblown expectations for East Timor's Greater Sunrise oil and gas

Forbes - March 2, 2018

Damon Evans – Reports that East Timor is set to bank tens of billions of dollars from the potential development of the Woodside Petroleum-operated Greater Sunrise oil and gas fields that straddle the Australian and East Timorese seabed are wide of the mark.

The Sydney Morning Herald, among others, recently reported "East Timor could receive up to 80% of revenue from the A$50 billion (US$40 billion) Greater Sunrise oil and gas field in the Timor Sea under a still-secret agreement with Australia".

But those big numbers set unrealistic expectations for the Timorese and their ardent supporters. The US$40 billion number refers to sales revenues from potential production of liquefied natural gas, or LNG for short, not royalties to a country.

In fact, the Timorese government is more likely to pocket around US$8.16 billion of royalties over 20 years, if it gets an 80% cut from any potential development of the oil and gas fields. Australia, would net around US$2.04 billion, or the remaining 20%.

Assuming Greater Sunrise can produce 92.6 million tonnes of LNG with a sales value of US$432 per tonne, then the sale of gas generates US$40 billion, Peter Strachan, an independent oil and gas expert based in Perth, told me. It may cost US$12.5 billion to produce that revenue after an initial capital cost of US$15.7 billion. So net cash generation before taxes is US$11.8 billion.

Therefore, if the governments typically took 50% of that, then Woodside and its partners, Shell, ConocoPhillips, and Osaka Gas, might end up with US$5.9 billion and the governments of East Timor and Australia would split the remaining US$5.9 billion over a 20-year project life, calculates Strachan.

But Greater Sunrise also holds oil, which makes developing the gas attractive. Assuming an oil price of US$70 per barrel then some US$12.5 billion worth of revenue could be generated from the fields, adds Strachan.

Operating costs might be US$3 billion to US$4 billion with much of the capital cost included in the gas side of the project, so developing the oil would generate operating cash after all costs of US$8.6 billion. With governments taking half of that as royalties and the project developers keeping about US$4.3 billion, oil would be about as valuable as the gas, says Strachan.

Put simply, there is a total estimated royalty for both oil and gas of US$10.2 billion available to be shared between the governments of Australia and East Timor, if the Greater Sunrise fields are ever developed.

These estimates are based on the oil and gas being produced using existing pipelines in the Timor Sea, as well as an existing processing plant in Darwin, Northern Australia.

Australia and East Timor will sign an agreement aimed at opening the way to sharing revenue from any potential development of Greater Sunrise at the United Nations in New York on 6 March.

But so far intense negotiations have failed to settle how the field could be exploited by the Woodside-led consortium. The Portuguese news agency Lusa quotes a Dili-based source familiar with the high-level negotiations as saying, East Timor would receive 80% of the revenue if gas from the fields is piped to the existing ConocoPhillips-operated Darwin LNG processing terminal in northern Australia, but could agree to 70% if gas is piped to a yet-to-be built industrial complex on its southern coast.

Recommendations from the UN-backed Compulsory Conciliation Commission, which has overseen negotiations between the neighbouring countries, on how a maritime dispute, which covers Greater Sunrise and its development, should be settled are expected to be released in mid-April.

East Timor has long advocated development of Greater Sunrise on its shores, which Dili claims would provide Greater Economic benefits, rather than allowing the gas to be piped to Australia using existing pipelines and processing facilities.

As I wrote previously, processing the oil and gas in East Timor, which Dili remains bent on, would render the development of Greater Sunrise uneconomic and there would be no government royalties to be shared. The costs and risks of laying brand new pipelines across a technically challenging deep-sea trench and building new processing infrastructure in East Timor are just too high.

Jeffrey Feynman, an independent US oil and gas consultant, who has consulted on various projects in the region, estimates it would cost US$24 billion to develop Sunrise in East Timor. He also calculated the project would lose $28 billion over its 30-year production life should the gas be processed in East Timor. It would lose much more if it hit technical problems when laying a deep-sea pipeline across the technically challenging Timor Trench, he told me.

In fact, no sane investor, unless compensated for their losses, would consider building new infrastructure in East Timor, except perhaps the state-backed Chinese oil companies. But in return for losing billions of dollars on a white elephant, Beijing would want its pound of flesh from East Timor. Building long concrete runways for its fighter jets and ports for its navy in the Southeast Asian nation is a tantalising prospect. But it's hard to see neighboring Indonesia and Australia letting the Chinese move into their neighborhood.

Yet time is running out for East Timor. Its revenues, largely generated from the ConocoPhillips-operated Bayu-Undan project, are shrinking rapidly. Bayu-Undan, the country's sole producing field, is expected to cease production around 2022.

The US-based major has said that the owners of Darwin LNG in northern Australia – which include Santos, Inpex, Eni and Tokyo Gas – are assessing several options to backfill the LNG plant from 2023. By that time, the plant's current offshore gas supply from the Bayu-Undan field, which lies in the joint petroleum development area (JPDA) between Australia and East Timor, will be exhausted.

The logical and most cost-effective backfill supply option would be Greater Sunrise. But the maritime dispute between Australia and East Timor, and Dili's insistence that the gas be processed on its shores, has stalled any progress on development of the field.

As a result, ConocoPhillips has said its proposed Barossa and Caldita fields off northern Australia are the leading candidates to backfill the plant's sole LNG processing unit. It is targeting to start engineering works for the fields in the second-half 2018.

Santos is also looking at developing its long-held gas assets in the Bonaparte Basin offshore northwest Australia, with ConocoPhillips' Darwin LNG facility a possible export point, the group said last month.

If Dili does not relent on its demands for Greater Sunrise gas to be processed on its shores soon, it's hard to see the fields being developed at all in the next decade. By which time, East Timor could be broke, data from Dili-based think-tank La'o Hamutuk shows.

Ultimately, Greater Sunrise is probably best left undeveloped for another decade, which will force East Timor to diversify its economy away from oil revenues. Perhaps, now the revenue sharing agreements and maritime boundaries are settled, the next government, due to be elected in May, will finally focus its energies on doing just that. Only time will tell.

[Damon covers the energy industries globally, with a particular focus on the politics and economics in Asia Pacific, as well as LNG and oil markets.]

Source: https://www.forbes.com/sites/damonevans/2018/03/02/overblown-expectations-for-east-timors-greater-sunrise-oil-gas/#7617212299a3

Timor-Leste's problems run deeper than a hung parliament, and they begin with

Crikey.com - March 1, 2018

Michael Sainsbury – In January, after half a year of political gridlock, Timor-Leste's president Francisco "Lu Olo" Guterres set the date for its 730,000 registered voters to head to the polls.

This would be the second time they have since last July's election, which saw a standoff between the minority government of popular freedom fighters turned political party Fretilin, headed by the country's original post-independence Prime Minister Mari Alkatiri, and the National Congress for Timorese Reconstruction (CNRT), led by charismatic revolutionary Xanana Gusmao.

Fretlin received just 0.2% more votes than CNRT to claim victory in last year's election, but fell short of a the required seats to govern. CNRT, which had previously formed a de facto coalition with Fretilin, refused to reform government, leading to the impasse.

The new election, set for May 10, will see campaigning held off after the Easter period, important for one of the world's most Catholic countries.

Guterres has, on paper, only limited power. He appoints and swears-in elected government and has control over the army. But crucially, as has been shown recently, he has the power to call a new election. His announcement of May's poll comes during a time of increasingly hostile tension among the government, the CNRT, and the smaller People's Liberation Party and Khunto Party.

And what has been Australia's official reaction or advice to what will be only the fourth ever general election ever in a country over which we boast midwifery? Nary a peep, demonstrating once again that money more central to Australia's attention than free and fair elections.

In the 16 years since Timor-Leste gained independence from Indonesia, Australia has poured an enormous amount of money, human resources and political capital into the country.

Last week, the hapless Turnbull government was forced to sign a renegotiated agreement on maritime borders that was far more equitable for the tiny nation, one which replaces the Howard government's unthinkably immoral, bullying and hypocritical deal that ignored UN conventions in the same way that we are now seeing in China and the South China Sea.

Bernard Collaery, the lawyer who played David for Timor-Leste against the presumptuous might of Australia, claims the new deal still won't give Timor-Leste what it deserves under UN sea boundary law but that it will give it access to a vast amount more of the estimated $53 billion in energy reserves beneath the sea.

But the primary wish of many of the people of Timor-Leste to whom Crikey spoke during a recent visit – including members of major political parties – is an end to the corruption that is eating away at national unity. There is also a widely held view that the revolutionary old guard (including Alkatiri and Gusmao) must make way for new blood, people who can better manage and deploy the country's considerable expected new wealth.

New infrastructure expertise and training are required to build new and sustainable sectors outside of energy, such as coffee, vanilla and tourism. This latest political stalemate must be the last hurrah for the old lions who have allowed corruption to weave its ugly web into the country, leaving 40% of people below the poverty line and with shocking infant mortality numbers.

As they say, the fish rots from the head down.

[Michael Sainsbury is a freelance correspondent in Asia and Little Red Blog Editor.]

Source: https://www.crikey.com.au/2018/03/01/timor-lestes-true-problems-run-deeper-and-they-begin-with-australia/

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