East Timor takes on "Goliath" Australia in oil talks
East Timor takes on "Goliath" Australia in oil talks
DILI, East Timor (DPA): When Australia and Indonesia agreed in 1989 to jointly exploit East Timor's vast offshore oil and natural gas deposits, their foreign ministers inked the deal on a private jet flying over the Timor Sea, toasting the treaty with champagne.
The arrogant display, in which Australia implicitly recognized Indonesia's 1975 invasion of the former Portuguese colony, was likened to the Biblical David and Goliath, where the defenseless territory's larger neighbors were unlawfully pillaging its resources.
Now East Timor, which split from Indonesia last year following a landmark ballot that was marred by murder and violence, is fighting back.
The UN, which is administering East Timor as it prepares for statehood, will begin negotiations on Monday with Australia for a new agreement on control over oil and gas fields between their maritime borders in the Timor Sea - called the Timor Gap.
East Timor, which has a US$43 million budget and is solely dependent on foreign aid, could receive a financial windfall of hundreds of millions of dollars in the next decade.
It is believed to be the first time the UN will negotiate a treaty on behalf of a territory or country, and that history is not lost on UN diplomat Peter Galbraith, who will head East Timor's team.
"There is a sense of injustice," Galbraith, a deputy chief of the UN Transitional Authority in East Timor (UNTAET), told Deutsche Presse-Agentur in an interview.
Indeed, Indonesia and Australia spent years haggling over who would control most of the Timor Gap as hundreds of thousands of people in East Timor died under the harsh military occupation.
Galbraith said UNTAET was so confident East Timor was legally entitled to the disputed oil and gas fields that it was prepared to take Australia to the International Court of Justice in the Hague if negotiations did not go well.
"The view of East Timor, which was shared by UNTAET, was that the Australian-Indonesian treaty was illegal because Indonesia didn't have the authority to make any decisions," he said.
Australia apparently did not think so and threatened UNTAET officials during preliminary talks earlier this year. They said the UN position could affect bilateral relations with East Timor, a source close to the negotiations said.
"The Australians were basically shocked and I think fair to say, not very gracious," the source told dpa. "They anticipated that the UN would do nothing during its tenure and an independent East Timor would follow the current treaty until a new treaty is negotiated."
The Australia-Indonesia treaty divided the Timor Gap into three connected vertical zones. The countries each controlled one zone, and jointly managed and split profits from the larger third section, called Zone A.
Maritime law in the early 1970s stated that a country's natural boundary was its seabed, which benefited Australia because its seabed north of Darwin is a 3,000-metre trench that included nearly all of the Gap.
But by 1982, a new interpretation of maritime law stated that countries were entitled to sovereignty over waters 440 kilometers off their coast. If there were not a 440-kilometer boundary between two countries, as was the case with East Timor and Australia, the boundary would be the mid-way point between their shores.
This interpretation meant that East Timor, still under Indonesian occupation, was entitled to all of Zone A as part of its mid-point boundary.
To avoid legal problems, the sides signed the 1989 interim treaty creating the Gap zones - which together look like a coffin - and split oil and taxes revenues from the largely unexplored Zone A.
Significant gas and oil reserves were later found in Zone A, including a staggering 3 trillion cubic feet of gas called Bayu Undan, making the Gap even more valuable.
UN negotiators will demand control of up to 100 per cent of Zone A when they meet with Australian officials beginning Monday in Dili, Galbraith said.
Australian officials have said they hope to retain the 50-50 split in Zone A that they had with Indonesia, although opposition politicians passed a resolution supporting East Timor's right to the mid-point maritime boundary.
Even if it loses joint control of Zone A, Australia still stands to earn tens of millions of dollars annually by handling gas piped from the Gap to facilities in Darwin.
UN-controlled East Timor has already received a few million dollars under the current treaty, but that is considered peanuts compared to future revenues estimated to be at least $80 million a year.
"Think of what that means in terms of rebuilding, and hiring teachers," Galbraith said. "Spent wisely, it would make an enormous difference to the future of the country. It would mean the difference between East Timor being dependent on long-term foreign aid and of being self-sufficient."