Ambalat revised: The way forward?

Ambalat revised: The way forward?

Clive Schofield and I Made Andi Arsana, New South Wales, Australia

The initial furor over ownership of the Ambalat offshore area
has died down as formal negotiations on the delimitation of a
maritime boundary have started and rival navies have been reigned
in. What now?

The idea of negotiating a maritime boundary agreement may make
unwelcome reading to many Indonesians convinced of the validity
of Indonesia's claims, as this means that Indonesia is unlikely
to secure the entirety of the disputed "Ambalat offshore area".
This is because it is rare indeed that a negotiation results in
one participant gaining everything and the other nothing.

Having said that, negotiation is certainly a hugely attractive
and likely route to dispute resolution compared to third-party
settlement options. Bilateral negotiations have the distinct
attraction for the Governments concerned of their retaining
control over the destiny of the dispute, quite apart from the
time and cost considerations involved in taking a case to the ICJ
at The Hague.

In this context it is perhaps worthwhile recalling that the
dispute sparked by oil exploration issues. Energy security
concerns, as well as nationalist concerns over sovereignty and
sovereign rights, therefore remain at the root of the dispute.

Experience from elsewhere around the world, no oil company
will invest a huge amount of money in the area where jurisdiction
over a particular seabed area is in doubt. No exploration and
exploitation will be done without political, legal and fiscal
certainties. This can, in turn have significant impacts on the
national economy for the States concerned.

In this regard it is certainly encouraging that negotiations
have begun in earnest with the first round of which took place in
Bali on March 22-23, 2005. However, the talks were conducted in
confidence and this has raised concerns among some Indonesian
people, that their Government is somehow deliberately keeping
them in the dark amid fears of a sell-out. Are people right to be
concerned at this apparent lack of transparency?

The answer here must be clearly in the negative as the vast
majority of such maritime boundary delimitation negotiations are
conducted in confidence. A key reason for this is to allow those
involved maximum flexibility to propose creative solutions, free
form intrusive media scrutiny. Indeed, most boundary negotiations
will specifically state that any proposals entertained in
negotiations are without prejudice to either Government's
position and, in sum; nothing is agreed until everything is
agreed.

Within the maritime negotiations context, however, it is true
that the potential presence of oil and gas can act as a relevant
factor in negotiating maritime boundaries. Apparently, neither
side is likely to secure the entire area under dispute. It is
generally hard to determine with accuracy the position, quantity
and quality of hydrocarbon reserves without extensive exploration
activity. A compromise line is, therefore, risky that the seabed
resources at stake may end up on the "wrong" side of the boundary
line.

In the Ambalat context, all of these factors apply. If a
negotiated delimitation line, mutually acceptable to both parties
is concluded, all well and good. Given the divergent positions of
the parties, however, such a resolution may prove difficult to
achieve, at least in the short term. There is, however, an
alternative solution. Indonesia and Malaysia could instead opt
for a joint development zone covering all or part of the
overlapping claims.

Both States have experience of this type of resolution:
Indonesia, in partnership with Australia, was the author of the
hugely complex and ground-breaking joint zone governing the Timor
Gap area (now partially taken over by Timor Leste post-
independence); and Malaysia through two joint development area
agreements with Thailand and Vietnam respectively. All of these
have proved successful.

Fundamentally, the joint zone option would allow the desired
resource exploration and development without undue delay and
without the need for a potentially costly and time consuming
delimitation exercise. Such arrangements therefore offer a
potential alternative avenue to resource development and sharing
where the opposing positions of the parties involved become
entrenched. These have the advantage of flexibility in terms of
area, duration and resource or function applied to. The
cooperative nature of such agreements can also have spin-off
benefits, acting as a confidence-building measure. In the
Indonesia-Malaysia case, a joint zone has the potential to help
to rebuild relations apparently soured both by the dispute over
Ambalat and issues such as Malaysia's recent forceful crack-down
against illegal workers in Malaysia, many of whom are Indonesian.

Finally, joint zones are in line with international law with
the Law of the Sea Convention stating in Articles 74 and 83
relating to the delimitation of the exclusive economic zone and
continental shelf that: "Pending agreement...the States
concerned, in a spirit of understanding and cooperation, shall
make every effort to enter into provisional arrangements of a
practical nature and, during this transitional period, not to
jeopardize or hamper the reaching of a final agreement. Such
agreements shall be without prejudice to the final delimitation."

This is not to argue that joint development is applicable in
all circumstances, merely because a dispute and overlapping
claims to maritime jurisdiction exist. For joint development to
function successfully, considerable political will is required.
The relationship between its signatories needs to be strong
enough to survive multiple changes in government over the years.

Nonetheless, for all the potential pitfalls, emerging State
practice appears to favor joint development and such practical
problem-solving approaches have the potential to be functional,
flexible and equitable. All in all, therefore, the joint
development option could represent a win-win scenario for both
Indonesia and Malaysia and is worthy of serious consideration.

Clive Schofield is a senior lecturer in the Center for
Maritime Policy, University of Wollongong, Australia.

I Made Andi Arsana is a lecturer in the Department of Geodetic
Engineering, UGM, currently research student in the University of
New South Wales, Australia