Timor Gap negotiations
1/01/2006
 
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Negotiations to determine seabed boundaries and ownership of the oil and gas reserves in the Timor Sea have been long-running between Australia and its northern neighbours - previously Indonesia and now independent East Timor. But despite reports of agreement being near, it appears the issue of permanent maritime boundaries will again be deferred.
1972
Creating the Timor Gap

Australia and Indonesia sign an agreement setting seabed boundaries in the area of the Timor and Arafura Seas. (The Arafura Sea is east of the Timor sea, between northern Australia and New Guinea.) In accordance with international law of the time, the boundary is set at the edge of Australia's continental shelf which is only 40 nautical miles from the coast of then Portuguese Timor.

However, because Portugal doesn't participate in the negotiations or accept their outcome, a 130-nautical mile gap in the boundary is left in the waters off Portuguese Timor. This becomes known as the Timor Gap.


1975
East Timor invasion

Indonesia invades and annexes East Timor.

It is later reported that prior to the invasion, then Australian ambassador to Indonesia, Richard Woolcott, sent a secret cable to the Department of Foreign Affairs in Canberra stating ..."This Department [of Minerals and Energy] might well have an interest in closing the present gap in the agreed sea border and this could be much more readily negotiated with Indonesia ..."


1979
Negotiations begin

Australia formally recognises Indonesia's claim over East Timor and negotiations on a maritime boundary in the area of the Timor Gap begin. Agreement is not reached.


1982
UNCLOS

The United Nations Convention on the Law of the Sea (UNCLOS) is finalised.

(In recent times, both Australia and East Timor have used UNCLOS to defend their positions: East Timor argues UNCLOS sets sea boundaries at the midpoint between two opposite states while Australia uses UNCLOS to back-up the positioning of the boundary at the edge of Australia's continental shelf.)


1989
The Timor Gap Treaty

Unable to agree on permanent seabed boundaries between East Timor and Australia, the Jakarta and Hawke governments sign the Timor Gap Treaty allowing resources in the area to be exploited without prejudicing any future boundary negotiations between the two countries.

The Timor Gap Treaty establishes three Zones of Cooperation - Zone A, Zone B and Zone C. Zones B is closest to Australia and Zone C is closest to East Timor. In these two zones, revenue is to be shared 90/10 with the closer country receiving 90 per cent.

Zone A, located between Zones B and C, is to be jointly managed through a Joint Authority. Revenue in Zone A is to be divided 50/50 between Australia and Indonesia.


1991
Legal challenge

Portugal does not accept the validity of the Timor Gap Treaty contesting its legality in the International Court of Justice (ICJ) in The Hague. But the ICJ dismisses the case in 1995 because it involves a third country, Indonesia, which does not recognise the court's jurisdiction.


1999
Vote for independence

East Timor votes for independence and United Nations Transitional Authority in East Timor (UNTAET) is formed. UNTAET replaces Indonesia as party to the Timor Gap Treaty.


2000
Timor Gap Treaty declared illegal

UNTAET and the East Timor Transitional Administration (ETTA) declare the 1989 Timor Gap treaty illegal on the grounds that Indonesia was an illegal occupier of the territory.

UNTAET, Australia and East Timor begin negotiations for future arrangements in the Timor Gap.


2001
Joint Petroleum Development Area

Map showing JPDA and Greater Sunrise FieldAustralia and UNTAET sign a Memorandum of Understanding of Timor Sea Arrangement (MOU) in anticipation of a new Timor Gap Treaty between Australia and East Timor when full independence occurs in May 2002.

The MOU cannot be made binding for a future East Timorese government but is aimed at allowing continued exploitation in the jointly managed Zone A, which under this MOU becomes known as the Joint Petroleum Development Area (JPDA).


2002
Australia withdraws from ICJ

Two months before East Timor gains independence, Australia withdraws from the section of the ICJ that deals with maritime boundary disputes in a move critics regard as indicative of Australia's weak position under international law.

The Timor Sea Treaty

On the day East Timor gains full independence, 20 May 2002, the Timor Sea Treaty (TST) is signed between the governments of Australia and East Timor in Dili.

The TST contains the same provisions as the 2001 MOU and states that revenue from the JDPA will be distributed on the basis of 90 per cent to East Timor and 10 per cent to Australia.

The TST resolves that the Greater Sunrise Field - the largest deposit in the area - falls 20.1 per cent within the JDPA and 79.9 per cent within the Australian zone.

Like the 1989 Timor Gap Treaty, the TST does not resolve the issue of a permanent seabed boundary and allows both countries to jointly exploit the oil resources of the area without prejudicing their long term rights to negotiate a permanent boundary in the future.

The TST will remain in effect until a permanent boundary is negotiated or for 30 years, whichever occurs first.

Maritime Zones Act

One of the first acts passed by the new East Timor Parliament is the Maritime Zones Act, which sets East Timor's sovereign maritime zones in a 200 nautical mile radius from the coastline. This claim overlaps with Australia's claim in the Timor Sea.


2003
Greater Sunrise field

In March, the governments of East Timor and Australia sign an International Unitisation Agreement (IUA) to determine the taxation regime for the Greater Sunrise Field. (Because the Greater Sunrise deposit falls within both the JDPA and the Australian zone, the IUA is necessary to determine how to develop the deposit as one unit.)

The agreement has not yet been ratified by the East Timorese Parliament who say the deposit lies in an area of overlapping claims. Exploitation of the deposit cannot commence until a unitisation agreement is concluded.


2004
Boundary talks begin

Regular talks on maritime boundaries and disputed reserves between Australia and East Timor begin in April 2004. While East Timor requests monthly talks, Australia agrees to biannual meetings.

A second round of talks are held in September.


2005
Agreement nears on Greater Sunrise field

On conclusion of another round of boundary talks in May, Australia's foreign minister, Alexander Downer, says the two countries are on the "threshold of an agreement" worth billions of dollars.

In July, East Timor's Foreign Minister Jose Ramos Horta says the two countries will sign a treaty within weeks.

The ABC reports that East Timor will receive 50 per cent of tax and royalty revenues from the entire Greater Sunrise field in exchange for the issue of a permanent maritime boundary being shelved for at least 50 years.

"Money isn't such a big issue for us, but the boundaries are," Mr Downer says.

Greater Sunrise deal reached, permanent boundaries deferred

In December, in an eighth round of negotiations, East Timor and Australia resolve their two-year dispute over oil and gas reserves in the Timor Sea.

The deal means each country will get half the revenue from the Greater Sunrise oil and gas field.

Canberra and Dili agree that a final maritime boundary will be deferred for 40 years - the expected life of the Greater Sunrise Field.

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