Read The Times Australia

Daily Bulletin

Australia's deal with Timor-Leste in peril again over oil and gas

  • Written by: Rebecca Strating, Lecturer in Politics, La Trobe University
Australia's deal with Timor-Leste in peril again over oil and gas

In April, Australia and Timor-Leste reached agreement on their maritime boundaries in the Timor Sea. This resolved a longstanding source of contention between them.

The potential benefits of this historic breakthrough are now in peril, because the critical issue of how the shared oil and gas of the Timor Sea are to be developed remains in dispute.

Breakthrough on maritime boundaries

Australia and Timor-Leste’s boundary agreement was achieved thanks to a unique dispute resolution process: the United Nations Compulsory Conciliation Commission. The commission was initiated under the United Nations Convention on the Law of the Sea (UNCLOS).

Because both Australia and Timor are parties to UNCLOS, Timor was able to invoke a compulsory conciliation process. It was the first time this has occurred.

Australia was at first reluctant to engage in the UNCC process. It lost its argument that the commission did not have the competence to negotiate the dispute. Australia did then engage with the process in good faith.

Indeed, the success of the UNCC was in large part due to the willingness of both parties to participate in good faith. A series of “confidence building” measures in 2016 helped build trust between the states.

By January 2017, Australia had agreed to terminate the existing Certain Maritime Agreement on the Timor Sea (CMATS). In return, Timor-Leste dropped two international legal cases it had initiated against Australia.

The process set up a neutral commission to run facilitated negotiations over a year, although sessions ultimately ran from July 2016 to February 2018. While participation in the conciliation was compulsory for the parties, it differed from an arbitration process, such as an international court, because the commission’s recommendations could only be non-binding. A crucial aspect of these facilitated negotiations were the discussion papers that allowed both states to think creatively about solving the dispute.

Ultimately, the process succeeded in its primary aim of helping Australia and Timor-Leste to resolve their long-running dispute in the Timor Sea. The breakthrough came in July 2017, when the countries outlined to the commission the points on which they were willing to compromise.

On August 30, an agreement on maritime boundaries, revenue split and an action plan for their engagement in the joint venture was reached. The maritime boundary treaty was signed on April 6 2018.

Deadlock over downstream developments

On May 9 2018, the commission, to little media fanfare, released its report and recommendations on the conciliation.

The report provides valuable insights into the ongoing disputes over development of the Greater Sunrise complex of gas fields located in the Timor Sea – a critical issue for Timor-Leste’s future economic security and development.

Australia and Timor-Leste asked the UNCC to extend its mandate to include the development concept for Greater Sunrise. This extended the sessions beyond the initial one-year period.

Despite its significant success in helping the states agree on maritime boundaries in the Timor Sea, the report indicates little progress was made on the question of how Greater Sunrise gas would be processed.

Crucially, Timor-Leste’s lead negotiator and newly re-installed prime minister, Xanana Gusmao, has consistently advocated a pipeline to the south coast of Timor-Leste to support the development of a Timorese oil and gas processing hub.

The Sunrise Venture Partners (SVP), led by Woodside, have preferred either a floating platform or, more recently, back-filling an existing processing plant in Darwin. Australia, for its part, describes itself as “pipeline neutral”, but supports the decision of the commercial venture partners.

To address this issue, the SVP was invited to participate in the commission process. The report suggests very little progress has been made between the three parties – Australia, Timor-Leste and the SVP – on this dispute.

The commission considered two development concepts, based in Darwin and Timor Leste respectively. According to Gusmao, the pipeline to Timor-Leste is “non-negotiable”. Yet, there is little impartial evidence that this concept would be commercially viable.

In an effort to find a way out of the impasse, the commission employed an independent consultant from a London-based firm, Gaffney, Cline & Associates, to comparatively analyse the two development concepts. The specialist’s assessment, provided in Annexe 27 of the report, said that for a Timorese processing hub to achieve an acceptable return, the Timorese government or another funder would have to subsidise the project to the tune of US$5.6 billion. This is about four times Timor-Leste’s annual GDP, or more than one-third of its Petroleum Wealth Fund.

A letter from Gusmao leaked to the commission in February 2018 – after the last round of UNCC meetings – accused the commission of lacking impartiality, preferring the Darwin concept to the Timor-Leste concept.

Read more: What's behind Timor-Leste terminating its maritime treaty with Australia

The letter also rejected the comparative analysis provided by the independent expert. It accused the technical expert of not having the “appropriate experience or understanding from working in Timor-Leste” and of having failed to consider the socioeconomic development benefits of the Timorese proposal.

In contrast, the commission’s report noted that Gaffney, Cline & Associates had previously worked for Timor-Leste, but that Australia had not objected to the appointment.

The report suggests that the three parties – Australia, Timor-Leste and the SVP – are no closer to agreement on how to process Greater Sunrise gas.

A looming threat to Timor-Leste’s development

The need to resolve the development issue is increasingly urgent. Timor-Leste is rapidly running out of revenue and development options. Over 90% of its annual budget comes from revenues from oil fields that are expected to be depleted within the next five years. Economically, Timor-Leste does not appear to have a plan B if its strategy for bringing gas to the southern shores of Timor-Leste fails.

Given its precarious situation, one might wonder why Timor-Leste is taking what appears to be a risky approach to this issue, and about what kind of agreements it has sought with other actors or states. In any case, the central element of the Timor Sea dispute seems far from resolved.

Authors: Rebecca Strating, Lecturer in Politics, La Trobe University

Read more http://theconversation.com/australias-deal-with-timor-leste-in-peril-again-over-oil-and-gas-95303

Business News

Options Available When a Company Faces Financial Distress

Financial distress can develop gradually or arrive suddenly, and when it does, the decisions made in the early stages often determine what options remain available later. Directors who act promptly ...

Daily Bulletin - avatar Daily Bulletin

What Healthcare Teams Look for When Choosing Specialist Surgical Supplies

In clinical environments, small details rarely stay small. A delayed instrument, a poorly matched device or inconsistent supply quality can affect theatre flow, staff confidence and patient outcomes. ...

Daily Bulletin - avatar Daily Bulletin

Reducing Sales Friction Through Centralized Content Delivery

Sales friction appears whenever buyers or sales teams face unnecessary obstacles in the buying journey. It can happen when information is hard to find, when messaging feels inconsistent, when product ...

Daily Bulletin - avatar Daily Bulletin

Why Choosing the Right Bollard Supplier Matters for Australian Businesses and Public Spaces

From busy CBD streetscapes to sprawling warehouse loading docks, bollards have become one of the most essential safety and security fixtures across Australia. Whether protecting pedestrians from veh...

Daily Bulletin - avatar Daily Bulletin

Why Modular Content Is Transforming Modern Marketing Teams

Modern marketing teams are expected to produce more content than ever before. They need to support websites, landing pages, email campaigns, social channels, product pages, sales enablement material...

Daily Bulletin - avatar Daily Bulletin

Everything You Need to Know About Getting Support from Optus

Whether you've been an Optus customer for years or you've just switched over, at some point you'll probably need to contact their support team. Maybe your bill looks different from what you expected. ...

Daily Bulletin - avatar Daily Bulletin

The Marketing Strategy That’s Quietly Draining Sydney Business Owners’ Bank Accounts

Sydney businesses are investing more in digital marketing than ever before. The intention is clear. More visibility should mean more leads, more customers, and steady growth. However, many business ...

Daily Bulletin - avatar Daily Bulletin

Why Mining Hose Solutions Are Essential For High-Performance Industrial Operations

In environments where the ground itself is constantly shifting, breaking, and being reshaped, every component must be built to endure. Mining operations are among the most demanding in the industria...

Daily Bulletin - avatar Daily Bulletin

The Reason Talented Teams Underperform

If you’re in business, you might have seen it before. A team of capable and smart people just suddenly slows down, and things start spiraling out of control. On paper, everything looks perfect, but ...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

Why Stress Relief For Dogs Is Essential For Emotional Balance And Long-Term Wellbeing

Managing emotional health is just as important as physical care when it comes to pets, which is why ...

Australia’s Best Walking Trails and the Shoes You Need to Tackle Them

Australia is not short on spectacular walks. You can follow ocean cliffs in Victoria, cross ancien...

Why Pre-Purchase Building Inspections Are Essential Before Buying a Home in Australia

source Have you ever walked through an open home and started picturing your furniture, family d...

5 Signs Your Car Needs Immediate Attention Before It Breaks Down

Car problems rarely appear without warning. In most cases, your vehicle gives clear signals before...

Ensuring Safety and Efficiency with Professional Electrical Solutions

For businesses in Newcastle, a safe and fully functioning workplace remains a key part of day-to-d...

Choosing The Right Bin Hire Solution For Hassle-Free Waste Management

When it comes to managing waste efficiently, finding the right solution can save both time and eff...

Why Cleanliness Is Critical In Childcare Environments

Children explore the world with curiosity, often touching surfaces, sharing toys, and interacting ...

What to Look for in a Reliable Australian Engineering Partner

Choosing an engineering partner is rarely just about technical capability. Most businesses can fin...

How to Choose a Funeral Home That Supports Families with Care

Choosing a funeral home is rarely something families do under ideal circumstances. It often happen...