TL oil/gas dispute with Australia continues

I post updates on TL and Australia oil/gas dispute.
East Timorese protest against Australian government
East Timor scraps sea-border talks with Australia Dow Jones – September 24, 2015

Canberra, Australia — East Timor has abandoned talks on a maritime boundary with Australia and renewed a legal challenge to gain a larger share of potentially lucrative undersea oil-and-gas fields.

East Timor’s government said Thursday it had advised Australia that it had reopened a challenge in the Permanent Court of Arbitration in The Hague to contest the validity of the Treaty on Certain Maritime Arrangements in the Timor Sea, or CMATS.

“Given the inability to discuss the degrees of jurisdiction in the disputed waters, [East Timor] is now of the view that the only way to resolve this matter is by submitting the dispute to an arbitration tribunal,” Agio Pereira, a spokesman for the East Timor government, said.

Australia’s Foreign Affairs Ministry wasn’t immediately available to comment on the renewed legal challenge.

Canberra and Dili have been involved in a long-running dispute over allegations of Australian spying ahead of negotiations on the 2006 sea-border treaty. East Timor argues that CMATS should be renegotiated because Australia had an unfair advantage during the talks because listening devices were allegedly placed inside the Timorese Cabinet Office.

Under the terms of the pact, both countries agreed to carve up billions of dollars in royalties from the Greater Sunrise field, which holds more than 5 trillion cubic feet of gas and condensate being jointly developed by partners including
Australia’s Woodside Petroleum Ltd., ConocoPhillips of the US and Royal Dutch Shell PLC.

Almost 80% of the area designated for development of the oil-and-gas fields lies within Australian waters, while the rest is in territory jointly administered by the two nations along a boundary set in 1972 when East Timor was still occupied by Indonesia. The field is 93 miles south of East Timor and more than 280 miles off Australia’s northern coastline.

The development has been delayed by a number of clashes, including over East Timor’s insistence that gas be piped and processed onshore to help create employment and a petroleum industry in the country, officially known as the Democratic Republic of Timor-Leste. The venture partners prefer to process the gas more cheaply using a floating vessel at sea.

Dili is also seeking to place the maritime border at an equal distance between the two countries-giving East Timor’s government a greater share of royalties from a resource it hopes will help the impoverished nation underwrite future development.

The current treaty has underpinned a national sovereign wealth Petroleum Fund totaling $17 billion, but it could run out as soon as the middle of the next decade with the legal dispute expected to last years. East Timor is 90% dependent on oil and gas revenue for its economy.

Australian Foreign Minister Julie Bishop in June told Parliament that Canberra wouldn’t renegotiate the treaty, arguing the existing maritime treaty already gave East Timor 90% of the revenue from the joint-development area and 50% from the Greater Sunrise field itself, most of which lies in exclusive Australian territory.

Stephen Grenville, an analyst at the Lowy Institute, an independent Australian foreign-policy think tank, said Canberra had good reasons to stand its ground, as the current arrangements also involved Indonesia and could have implications for Australia’s wider undersea territorial claims.

“It is certainly true that Sunrise is closer to Timor than it is to Australia, but it is closer to Indonesia than it is to Timor,” Mr. Grenville said in a briefing note last month. “If you want to draw this border with a view to getting Sunrise into Timor’s territory, you will surely open up the issue of Indonesia’s border.”

Shifting the treaty boundary with the objective of giving Timor all of the potential Sunrise revenue could likely put the field eventually in Indonesian territory. It seems unlikely Indonesia would be ready to give 50% of Sunrise revenue to Timor,” Mr. Grenville said. “Timor would get nothing.”

Australia will vigorously defend legal action initiated by East Timor over Australia’s right to tax a oil and gas pipeline to Darwin from the Bayu Undan gas field, say senior ministers.

Foreign Minister Julie Bishop and Attorney-General George Brandis issued a statement on Friday saying the treaty covering the project states the jurisdiction depends on where the pipeline lands.

But East Timor says the countries are in dispute over the interpretation of a section of the treaty and its government disagrees with Australia’s assertion that it has absolute and exclusive jurisdictional rights over the entire length of the pipeline, including into the joint petroleum development area.

“Australia’s claim would deny Timor-Leste any jurisdictional rights relating to this pipeline or activities relating to this pipeline,” a spokesman said.

“This is inconsistent with the text and purpose of the treaty and is not supported by any negotiating or other documents that have been brought to light.”

The spokesman said efforts to discuss the matter had come to nothing. “Timor-Leste remains willing to resolve the dispute directly with Australia,” he said.

Timor-Leste initiates arbitration proceedings under the Timor Sea Treaty: Minister of State and of the Presidency of the Council of Ministers and Official Spokesperson for the Government of Timor-Leste Dili, September 24th, 2015.

Timor-Leste disagrees with Australia’s assertion that it has absolute and exclusive jurisdictional rights, including taxation rights, relating to the entire length of a petroleum export pipeline including into the Joint Petroleum Development Area.

Australia’s claim would deny Timor-Leste any jurisdictional rights relating to this pipeline or activities relating to this pipeline. This is inconsistent with the text and purpose of the Treaty and is not supported by any negotiating or other documents that have been brought to light, in particular as it pertains to jurisdiction within the Joint Petroleum Development Area.

Horta : “I’m hopeful and convinced we can work out an improved Maritime Agreement”
East Timor former President DR. Jose Ramos Horta Written by Tempo Semanal Kwarta, 23 Setembru 2015 08:37
By Caitlin Taylor and Somerset Lewis

Time is running out for Timor-Leste and Australia to reach an agreement surrounding maritime boundaries, as disputes continue over claims to lucrative oil reserves below the Timor Sea.

In 2006 the two countries signed the ‘Treaty on Certain Maritime Agreements in the Timor Sea’, dividing up revenue from the Greater Sunrise oil field and joint development areas.

But the Timor-Leste Government has since launched arbitration against Australia, after claims of bugging by Asio officials in Dili’s cabinet room in 2004, to sway negotiations in their favour.

Currently oil and gas pay for 95 per cent of Timor-Leste’s state revenues, but should oil projects in the Timor Sea remain stalled, the country’s Petroleum Fund could expire by the mid-2020’s, according to the Timor-Leste Institute for Development Monitoring and Analysis.

Speaking to Tempo Semanal, former president and Nobel Peace laureate Jose Ramos-Horta warned that as negotiations continue without any end in sight, valuable revenue is being wasted.

“Timor-Leste is running out of time, with the oil price dramatically dropping we don’t have unlimited resources to pay lawyers or to wait, so we have to find better ways to protect our interests,” he said.

“We’re entitled to a median line with equal distance between Australia and Timor-Leste, and it’s possible to reach an agreement but the problem is that it could take forever.”

Under current arrangements, 50 per cent of the revenue from the Greater Sunrise project would go to Timor-Leste, but the disagreement over the maritime boundary means the field is yet to be developed and is unlikely to produce returns in the near future.

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