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