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LHB Timor Gap.Pmd iThe La’o Hamutuk Bulletin Vol. 3, Nos. 4-8 May-December 2002 Compilation of Timor Sea Reports During the last half of 2002, The La’o Hamutuk Bulletin published many reports on Timor Sea oil and gas issues which are collected in this compilation. Additional information and future reports can be read on La’o Hamutuk’s web site at http://www.etan.org/lh or the OilWeb CD-ROM (see page 27). May 2002 With Independence, What Changes for the Timor Gap? Borders and Oil Deals between Australia and East Timor evenues from oil and natural gas currently repre- Indonesia. The question of whether East Timor’s share sent East Timor’s greatest hope for meeting the is closer to US$8 billion or to US$38 billion depends Rnation’s basic needs in the future. Although a few largely on where boundary lines are drawn in the Timor small oil and natural gas deposits exist on East Timor’s Sea. Some experts state that if the maritime (seabed) land, the current discussion focuses on much larger oil boundary were established using current international and gas deposits in the waters between East Timor and legal principles, East Timor would stand to gain more Australia. These deposits mean between US$8 and than US$30 billion. The issue of the maritime boundary US$38 billion (thousand million) for East Timor over between Australia and East Timor is not new, but East the next thirty years. (East Timor’s government budget Timor’s independence brings new questions and chal- for the coming year is US$77 million.) lenges. Currently, East Timor and Australia are negotiating a Many expect that shortly after East Timor’s official treaty to jointly develop petroleum in the Timor Gap, an independence, new East Timorese Prime Minister Mari area previously subject to a treaty between Australia and Alkatiri and Australia will sign the ‘Timor Sea Arrange- Contents. Maps of Timor Gap Treaty and Timor Sea Arrangement ................................. 2-3 PetroTimor: Ancient History? ................................................................................. 4 Editorial: Australia: Stop Stealing East Timor’s Oil............................................. 7 With Money, Oil Also Brings Problems (OilWatch) .............................................. 8 The Process of Petroleum Exploitation ................................................................. 10 Choosing Wealth Instead of Oil (Costa Rica) ....................................................... 10 Oil and gas fields in the Timor Sea (map) ............................................................ 11 Four-Fifths of Australia’s Gas is Outside the Timor Sea (map) ......................... 12 Company Shares of Timor Sea Oil and Gas Fields (graph) ................................ 13 Annual Revenues of Governments and Oil Companies (graph) ......................... 13 Timor Sea Oil Companies at a Glance (profiles).................................................. 14 Report on SEAAOC Offshore Petroleum Conference in Darwin ...................... 18 These reports are La’o Hamutuk: Australian Parliament should not ratify the Timor Sea Treaty20 also available in Chronology of Oil and Gas Developments in the Timor Sea 1893-2002 ............ 23 Bahasa Indonesia. Announcing La’o Hamutuk’s OilWeb CD-ROM ................................................. 27 Australian and East Timorese Views of the Timor Sea (government maps) ..... 28 La’o Hamutuk, The East Timor Institute for Reconstruction Monitoring and Analysis P.O. Box 340, Dili, East Timor (via Darwin, Australia) Mobile: +670-7234330; Land phone: +670(390)325-013 Email: [email protected] Web:http://www.etan.org/lh ment’ which was negotiated by the Australian govern- little understood by most East Timorese. Future issues ment and UNTAET/East Timor in 2001. This agreement of the La’o Hamutuk Bulletin will look at other aspects will then go to East Timor’s new Parliament for ratifi- of East Timor’s oil and natural gas resources, including cation as a treaty on the Timor Sea reserves. Its propo- current exploration projects, oil companies’ involve- nents call the agreement the “best deal” that East Timor ment, labor and environmental concerns, and the global can get at this time with Australia, and are quick to ex- context of oil and gas exploitation. plain that it is a temporary agreement “without preju- dice to East Timor’s maritime boundaries,” which means Maritime Boundary between East Timor and that the agreement will not influence the determination Australia of a future maritime boundary decision. Others, how- Upon independence, East Timor will have no defi- ever, believe that this agreement will compromise East nite maritime boundaries and will need to seek mari- Timor’s ability to claim broader boundaries and thus time boundary agreements with both Indonesia and Aus- gain access to all the seabed deposits to which the coun- tralia. Past maritime boundaries between Australia and try could be legally entitled. Indonesia lay the foundation for the current division of La’o Hamutuk has written two editorials on the Timor oil and gas reserves in the Timor Sea as well as in the Gap negotiations (see LH Bulletin Vol. 1, No. 3 and Vol. proposed treaty. To understand where East Timor cur- 2, No. 5). In this article, we provide information regard- rently stands, it is important to look at the history of the ing the question of maritime boundaries and the pro- maritime boundary between the two countries. posed treaty. We also hope to encourage more transpar- In 1972, using the continental shelf argument (which ency and dialogue around this important issue, which is argues that a seabed boundary should follow the deep- Map 1: Timor Gap Treaty 1989-1999 (Australia and Indonesia) 1999-independence (Australia and UNTAET) Oecussi Indonesia (West Timor) Page 2 2002 La’o Hamutuk Bulletin Compilation est point on the ocean floor between the countries), Aus- redefined international maritime law stating that for tralia managed to negotiate with Indonesia a maritime countries with less than 400 nautical miles of sea be- boundary that gave Australia 85% of the ocean territory tween them, the international boundary would be the between the two countries. Portugal never accepted the mid-point. continental shelf argument and unsuccessfully sought a The United Nations never recognized East Timor as boundary located mid-way between Australia’s and East part of Indonesia. However, in 1989, despite ongoing Timor’s coastlines. The contested area became known human rights violations, Australia and Indonesia signed as the “Timor Gap.” the Timor Gap Treaty. This treaty divided the Timor Gap In 1975, with full knowledge of Indonesia’s intention region into three sections in which petroleum produc- to invade East Timor, Australian Ambassador to Jakarta tion in the largest area, Area A, was to be equally shared Richard Woolcott sent a confidential memo to his gov- by the two countries. In Area C, closest to East Timor, ernment, stating that “closing the present gap in the 90% of the production would go to Indonesia and 10% agreed sea border could be much more readily negoti- to Australia. In Area B, Indonesia received 10% and ated with Indonesia…than with Portugal or an indepen- Australia 90%. (See Map 1.) dent Portuguese Timor.” He noted in the memo that the Under this division, contracts were signed with mul- Ministry of Mines and Energy might be interested in tinational oil companies including U.S.-based Phillips this. Petroleum, British and Dutch owned Shell, and Austra- In 1979, after international outcry over Indonesia’s lian-based Woodside and Broken Hill Propriety (BHP). brutal invasion and occupation of East Timor had sub- Contracts were signed in December 1991 and first ex- sided, Australia began to negotiate with Indonesia on plorations began in 1992. For the Australian govern- the Timor Gap area. Unable to agree on permanent mari- ment and these companies, the prospect of money from time boundaries, the two countries decided to create an oil was more important than East Timor’s human and agreement to jointly develop petroleum in the area be- political rights. tween the median line to the south and the 1972 seabed As these explorations in the Timor Gap were begin- boundary to the north. Only a few years later, in 1981, ning, Portugal brought a case against Australia and the Australia and Indonesia agreed on a fishing boundary Timor Gap Treaty to the International Court of Justice that ran along the median line. And in 1982, the United (ICJ), claiming that the Treaty violated the rights of both Nations Convention on the Law of the Sea (UNCLOS), Portugal and the people of East Timor. In the end, the Map 2: Timor Sea Arrangement and disputed boundary area East Timor 1972 Indonesia-Australia Seabed boundary East Timor's Possible Entitlement Greater Sunrise 5 July 2001 Australia/East Timor Joint Petroleum Development Area (formerly "Area A") Laminaria- Corallina 1972 Indonesia-Australia Seabed boundary Bayu-Undan Median line La’o Hamutuk Bulletin Compilation 2002 Page 3 court was unable to rule on the case due PetroTimor: Ancient History? to Indonesia’s refusal to recognize the Many of the experts who have recently raised questions around Timor jurisdiction of the ICJ. Still, the case Sea oil developments were brought here by PetroTimor, a U.S.-based was significant in that it raised interna- company. PetroTimor was first involved in East Timor oil developments tional public awareness of the Timor more than thirty years ago – and their involvement now could have Gap Treaty,
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