Timor Leste 'no better off in short term' despite sea treaty cancellation

A controversial Timor Sea resources revenue treaty has been torn up, but one expert says Timor Leste will still be no better off in the short term.

The Montara well head platform and West Atlas rig in the Timor Sea.

The Montara well head platform and West Atlas rig in the Timor Sea. Source: AAP

Timor Leste will be no better off despite the cancellation of a treaty that divided resource revenues between the country and Australia, an expert says.

Deakin University southeast Asia expert, Damien Kingsbury, told SBS News the cancellation of the 2006 treaty means a pre-existing 2002 treaty is now back in force.

"East Timor is no better off in the short term under the new arrangement," he said.

"There’s no particular benefit to Australia between the two agreements. Australia will have to pay a small amount of money to East Timor in the 2002 agreement now that that’s back in force, but that’s not really significant in the grand scheme of things and it doesn’t really alter the broader financial arrangements around the division of resources."

Timor Leste has long pushed for Australia to agree to a maritime boundary between the two countries that would comply with the international law of the sea.

A halfway boundary between the two nations would mean the mineral rich fields would be under Timor Leste's control.

The government also argued, successfully, that Australia negotiated the 2006 treaty, which allowed Australia a disproportionate share of the oil and gas revenues from the Timor Sea operations, in bad faith after allegedly bugging the Timor Leste government.

Students during a sea boundary protest outside the Australian embassy in Dili, Timor Leste, 22 March 2016. Source: EPA

"It would appear that Australia has agreed that it was conducted in bad faith and that treaty has been cancelled," Professor Kingsbury said.

"The current status is both governments have said they will enter into negotiations around a permanent maritime boundary between Australia and East Timor – that’s what East Timor has been arguing for. The question now is whether that is going to occur in a shorter time frame or in a longer time frame.

"I think more likely is it’s going to take quite some time, indeed Australia may not negotiate in good faith or it may not negotiate with any sense of urgency, the practical outcome being the existing arrangements in the Timor Sea remain in place."

Timor Leste's ambassador to Australia, Abel Guterres, told SBS News the maritime boundary was a bigger picture than resources revenue.

"Timor Leste needs to know what part of the sea belongs to it in terms of its development, its long term economic issues," he said.

"As a new state we must know what belongs to us and in terms of our fisheries, our navy corporation, how far can our navy come into the waters in the Timor Sea, and (how) far Australian navy can go there, so this is a bigger picture issue in terms of co-operation between the two countries and this is where clear jurisdiction is so important."

Mr Guterres said it was important that both sides had agreed to come together and negotiate under international law.

"International law is neutral, that both sides can live with because neither side imposing on the other, which is very important, and both sides have agreed to negotiate under international law and that is perfect for Timor Leste," he said.

"I’m sure the end result will satisfy both sides and that is what is important for us."

Timor Sea Campaign's national co-ordinator, Ella Fabry, told SBS News the cancellation of the treaty was "the first step in righting the wrongs of the past".

"For us, we’re hoping it means it will pave the way to negotiating a much fairer maritime boundary with Timor Leste," she said.

"The simple and fairest solution for this is to draw permanent maritime boundary along the median line. That’s what would be in accordance with the international law."

Professor Kingsbury said Timor Leste was in a difficult place financially, and needed access to the Timor Sea's Greater Sunrise liquid natural gas (LNG) project revenue in order to shore up its economic future.

But even this solution is unlikely to solve all the country's financial woes.

"East Timor currently has about $16 billion in the bank and it’s supposed to be living off the interest from that revenue stream, however it’s also been using the capital from that account and at this rate of expenditure East Timor will be broke by the end of the 2020s, so what it hopes to do is to tap into the resources of the Greater Sunrise field," he said.

"In the heyday of the Greater Sunrise field, when LNG prices were high, the field was thought to be worth about $45 billion in revenues, which would be divided evenly between Australia and Timor Leste.

"However LNG prices have fallen very considerably since then, so even if East Timor does get access to the field, and even somebody does choose to develop it, and even if the timing of that fits into its other more pressing financial requirements, it’s not clear that East Timor will derive enough money from that field to sustain it into the long-term future."

Ms Fabry said a fair maritime boundary would provide "economic security and it would close the journey to independence for them".

"They’re a fledgling nation, they’ve only just become independent 14 years ago, so for them it would mean completing that journey to independence and knowing exactly what their economy is going to look like for the next 10 years," she said.

"I think the conciliation that came about late last year was a huge victory for Timor and it was a huge victory for fairness and good relationships in the region and a lot of the pressure that’s going to go on the Australian government will come from the Australian people who are lot more wary of them this time around."

6 min read
Published 9 January 2017 at 7:13pm
By Kerrie Armstrong, Myles Morgan
Source: SBS