Australia, Timor Leste scrap Timor Gap oil and gas treaty

Australia and Timor Leste have jointly announced an agreement to abandon the temporary treaty that regulates maritime boundaries in the Timor Sea and has given rise to a long-running dispute over sharing revenues from oil and gas.

The joint statement said the two countries will scrap the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS). It follows a request by Timor Leste and Australia’s recognition of its neighbor’s right to initiate the termination. The termination will take effect after a 3-month transition period.

This is expected to enable negotiations to take place to establish a permanent marine border between the two countries, a process that the 2006 treaty had put aside for 50 years.

Since Timor Leste gained independence from Indonesia in 1989, it has been unable to establish a permanent boundary to set out how much each country should receive in oil and gas revenues from the Timor Sea fields within the disputed area of the so-called Timor Gap.

The Law of the Sea says that the boundary should be equidistant from the two countries. This would place the majority of the yet-to-be-developed Greater Sunrise oil and gas fields operated by Woodside Petroleum Ltd. in Timor Leste territory. However Australia has always claimed that the boundary should be at the outer edge of Australia’s continental shelf, which happens to be closer to Timor Leste.

The 2006 CMATS treaty set no permanent boundary, but did say that revenue from Greater Sunrise would be split equally between the two countries. Despite this, the relationship remained problematic and the Woodside group has not felt comfortable with the political climate or the lack of an agreed legal and regulatory framework for the resources. Consequently no development has taken place.

Relations then took a bitter turn in 2013 when it emerged that Australia had been spying on Timor Leste’s cabinet ministers during negotiations for the 2006 treaty.

In April 2016 Timor Leste began compulsory conciliation proceedings against Australia at the Permanent Court of Arbitration in The Hague. The court ruled in October that the two parties and the court’s commission would hold meetings during 2017 to seek a permanent solution.

This week’s joint agreement to scrap the 2006 treaty is a step in that direction, although it did not set a timetable or deadline for the establishment of the permanent boundary.

Even so, Woodside has welcomed the commitment to negotiation as a positive move towards commercialisation of the Greater Sunrise fields.

The Sunrise and Troubadour fields were discovered in 1974. They lie 150 km southeast of Timor Leste and 450 km northwest of Darwin.

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