On the Timor Gap

On the Timor Gap

Indonesia (and Australia, too, perhaps) may not benefit from
the natural wealth lying in the Bonaparte Basin, the Timor Sea,
if East Timor is given up as one of Indonesia's provinces.

According to media reports from Australia and some other
sources, an Australian company, BHP, in cooperation with its
partners, Petros, Santos and Inpex, has developed the Elang-
kakatua (Eagle-cockatoo) oil field with a proven reserve of some
30 million barrels which is expected to generate a revenue
totaling A$136 million.

In the near future, Bayu-Undan gas-condensate field worth
A$2.5 billion will also be developed with a proven reserve of 900
million barrels of oil equivalent (BOE), as will the Sunrise-
Troubadour oil field, part of which is in the Timor Gap area.

These oil fields belong to the A Zone under the Timor Gap
Treaty. In terms of oil potential, the oil fields in the
territory of the Timor Sea are on the list of the world's 23
largest oil fields.

The Indonesian-Australian governments have agreed to undertake
oil and gas exploration and exploitation activities in the Timor
Sea area, as expressed in a joint statement on the zone of
cooperation signed by the two governments on Oct. 25, 1988.

The agreement essentially stipulates the following: "... the
zone of cooperation will be delineated in the northern side by a
simplified bathymetric axis line, in the southern side by the 200
nautical mile line measured from the Indonesian archipelagic
baselines, and in the eastern side and western side by
equidistant lines.

The zone of cooperation (ZOCA) is divided into three parts --
A, B and C areas. Area B is under the supervision of the
Australian government while area C is supervised by the
Indonesian government. Area A is the zone of cooperation, the
administration of which is under the joint authority of the two
countries and is referred to as "the Timor Gap".

Under the joint authority (Area A), the operator of BHP oil
field and its partner must give production royalties to the
Indonesian and Australian governments. It is estimated that in
two years production royalties will amount to some A$64 million.

In August 1998, prior to the inauguration of Elang-kakatua oil
field, Peter Cockroft of BHP representative office in Jakarta and
Jose Alexandre "Xanana" Gusmao, supreme leader of the CNRT
resistance movement, held a secret talk in Cipinang Penitentiary
on the legality of the Timor Gap Treaty. It was reported that in
this meeting Xanana said he did not recognize the Timor Gap
Treaty and that he would continue to refer to the UN-recognized
authority of the Portuguese government over the Timor Sea. The
result of this talk was exposed by Australian mass media with the
result that Peter Cockroft had to go back to the head office of
BHP in Melbourne on Aug. 27, 1998.

With Portugal's support by lobbying industrialized countries
in Europe to participate in developing the rich oil and gas
potential in the Timor Sea, East Timor, with a population of only
850,000 people, will at the turn of the century become a new oil-
rich country, just like Brunei Darussalam and the Middle-Eastern
petro-dollar states. That Portuguese lobbying is quite effective
is evident from the financial support extended by Stat Oil,
Norway (one of Europe's largest oil companies) in the form of
budget allocation totaling US$400,000 for East Timorese students
studying petroleum engineering in Norway.

DIRGO D. PURBO

Oil & gas industry observer

Jakarta