Australia faces East Timor challenge to oil rights

Australia faces East Timor challenge to oil rights

SYDNEY (AFP): Australia may have to concede most of the
potentially massive oil and gas reserves in the Timor Sea to an
independent East Timor, legal and oil industry officials said
Thursday.

The reserves lie in an area covered by a complex treaty
Australia signed with Indonesia in 1989, which divides
exploitation rights to the seabed between Australia and East
Timor.

But officials said Thursday an independent East Timor would
have a powerful case to renegotiate the contentious Timor Gap
treaty, and win a larger share of oil and gas revenues estimated
at between 500 million and five billion barrels.

A spokesman for Foreign Minister Alexander Downer said the
government was happy with existing arrangements, but the future
of the treaty was under "active consideration".

"The arrangement is a matter for both parties to agree on in
due course," he told AFP. "Both parties are aware of the
commercial importance to maintain stability in the region."

Oil industry consultant and Timor Gap analyst Geoffrey McKee
said the poverty-stricken East Timor could make an unanswerable
case.

"All our research points to the fact that a settlement in
accordance with international norms would be in East Timor's
favor," he said.

"If it goes to arbitration East Timor can't lose."

This region of the Timor Sea became known as the Timor Gap
after a 1972 seabed border agreement between Australia and
Indonesia was challenged by Portuguese Timor.

Australia sought to have the border follow its continental
shelf, while the Portuguese insisted it be midway between their
coastlines, which would have seen the bulk of the oil and gas
reserves fall under Portuguese control.

"The view that it would be strategically and economically
advantageous to Australia if Indonesia took East Timor was a
factor in Canberra's passivity about the (1975) invasion," Andrew
McNaughtin, convener of the Australia East Timor Association,
said.

He said it would be up to a future independent East Timor to
decide how to handle the treaty, which Indonesia formally
withdrew from in January.