Get the facts right on Timor Sea!

A lot of errors are being repeated and floated around about the Timor Sea negotiations between Timor-Leste, Australia and the oil companies lead by Woodside, as exemplified by the articles here and here. The following is a response by Charlie Scheiner of La'o Hamutuk (and another response here) in an attempt to set the record straight and educate people on this complex issue:

Unfortunately, this article (posted on The Diplomat) repeats many of the errors in the blog on which it is based. Here are the most important: 

There has never been a maritime boundary between Timor-Leste (East Timor) and Australia, largely because Australia has refused to allow overlapping claims to be resolved by judicial processes or through negotiation. Therefore, there is nothing to “redraw.”
Article 12.2 the CMATS treaty sets February 23, 2013 as the first date on which either Timor-Leste or Australia can give notice to terminate most of that treaty, including the clause which prohibits discussion or other methods to establish a maritime boundary, if the regulatory bodies of the two nations have not yet approved a development plan for the Sunrise field (and such a plan has not been approved). Both Australia and Timor-Leste agreed to this article when they signed and ratified the treaty. Implementing Article 12.2 would not undercut any agreement or understanding between the two governments. 

The 90-10 split of revenues from the JPDA is in the 2002 Timor Sea Treaty and 2003 Sunrise International Unitization Agreement, not CMATS. “Scrapping” (i.e., terminating through a mutually agreed process) CMATS does not affect this sharing. However, if future negotiations lead to a permanent maritime boundary consistent with current international legal principles (a median line between the coastlines), most or all of the Sunrise and Bayu-Undan fields would like in Timor-Leste’s territory. This could change who the companies pay their taxes to, but would not affect the terms of the contracts from the companies’ perspectives. 

The Greater Sunrise contracts for Woodside and its partners, signed with a binational agency in 2003, would not be affected by terminating the CMATS Treaty, which was written many years later. The Government of Timor-Leste has consistently said it will comply with all terms of all contracts and treaties it has signed and ratified. Timor-Leste does not break its word, nor is it “politically volatile.” 

Restarting processes to resolve maritime boundaries is not a high-risk venture for Timor-Leste or anyone else. Article 12.3 of the CMATS Treaty states that it will come back into force, including the 50-50 sharing of Sunrise upstream revenues, if production starts from Greater Sunrise. Discussions with the joint venture and Australia about development plans are continuing, and when they agree on how and where the Sunrise gas should be liquefied, the project will continue and CMATS will be re-activated. 

The two nations may have agreed on a maritime boundary by then or reached consensus on other changes to their petroleum agreements. It is both normal and legal (under the Vienna Convention on Treaties) for both parties to any agreement, at any time, to be able to modify it by mutual consent. What is abnormal is the CMATS gag rule on maritime boundary discussions – and this week marks the date both governments decided that it could be removed. 

Readers of the Diplomat can find more accurate and comprehensive coverage of this evolving issue, including the texts of relevant documents and commentary from many perspectives, at http://www.laohamutuk.org/Oil/Boundary/CMATSindex.htm.