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Certain Maritime Arrangements in the Timor Sea, the Timor Sea Treaty and the Timor Gap, 1972-2007

Submission to the

Australian Parliament’s Joint Standing Committee on Treaties

Inquiry into the Treaty on Certain Maritime Arrangements in

the Timor Sea

Robert J. King
peth@nla.gov.au

March 2007

Certain Maritime Arrangements in the Timor Sea, the Timor Sea Treaty and the TimorGap, 1972-2007
Robert J. King
March 2007

On 23 February 2007 in Dili, the Australian and East Timor governments formally exchanged notes to bring into force two treaties that provided the legal and fiscal framework for the development of the Greater Sunrise gas field in the Timor Sea. The notes covered the Sunrise International Unitization Agreement (IUA) and the Certain Maritime Arrangementsin the Timor Sea (CMATS) Treaty. CMATS, signed in January 2006, put on hold the two countries' claims to jurisdiction and maritime boundaries in the Timor Sea for 50 years. Under the terms of the treaty, Australia agreed to share upstream revenues from Greater Sunrise equally with East Timor. "Equal sharing of the upstream revenues from Greater Sunrise under CMATS could result in Australia andEast Timor each receiving up to $10 billion over the life of the project," Australian Foreign Affairs and Trade Minister Alexander Downer said in a statement. The IUA, first agreed in March 2003, enabled the development of Sunrise, which straddled the eastern border of the Joint Petroleum Development Area in the Timor Sea. The JPDA is jointly administered by Australia and East Timor and wasestablished by the 2002 Timor Sea Treaty, under which Dili receives 90% of government revenue from the production of petroleum resources in the area. 1 The Timor Sea Treaty replaced the 1989 Timor Gap (Zone of Cooperation) Treaty between Australia and Indonesia, which lapsed when East Timor ceased to be a province of Indonesia following a United Nations supervised act of selfdetermination on 30 August1999. The Joint Petroleum Development Area created by the Timor Sea Treaty covered Zone of Cooperation Area A established by the Timor Gap Treaty. The Timor Gap Treaty was described as a unique arrangement for enabling petroleum exploration and exploitation in offshore areas subject to competing claims by two countries, and for the sharing of the benefits between those countries. 2 It was signed inDecember 1989 to deal provisionally with the gap in the seabed area not covered by the 1972 Seabed Agreement between Australia and Indonesia, the seabed area between Australia and East Timor. When the 1972 Seabed Agreement was negotiated, a 'gap' was left between the eastern and western parts of the Australia-Indonesia seabed boundary in the area to the south of Portuguese Timor: the 'Timor Gap'.The Creation of the Timor Gap The necessity for seeking agreement with Australia’s neighbours on national seabed boundaries emerged as exploration began to reveal the existence of exploitable deposits of gas and petroleum on the seabed contiguous to the Australian continent. A consortium consisting of Arco Australia Ltd, Australian Aquitaine Pty. Ltd. and Esso Austra1ia Ltd. had begun geophysicalexploration in the Timor Sea and Bonaparte Gulf in 1962. 3 A second consortium comprising Woodside Petroleum, Burmah Oil
1 2 3 “Australia, Timor-Leste bring Sunrise gas treaties into force”, PLATT, 26 February 2007. Mr Payne. Senate Foreign Affairs, Defence and Trade References Committee Hansard (hereafter Committee Hansard), 11 November 1999, p.873. R. Laws and C. Kraus, 'The Regional Geology ofthe Bonaparte Gulf-Timor Sea Area', APEA (Australian Petroleum Exploration) Journal, 1974, p.77.

2

Company and the Anglo-Dutch Shell Oil Company conducted an aeromagnetic survey in 1963, followed by seismic surveys in each of the years 1964-1968. 4 The extensive exploration efforts undertaken by both consortiums in the Timor Sea/Bonaparte Gulf/Browse Basin area from 1962 had by 1970...