BY: KATIE DOBOSZ KENNEY
At 6:00 pm on March 6th, the Treaty Between Australia and the Democratic Republic of Timor-Leste Establishing Their Maritime Boundaries in the Timor Sea was signed under the supervision of UN Secretary General, Antonio Guterres. This treaty, the result of a two year conciliation mediated by the Permanent Court of Arbitration (PCA) in the Hague, ends years of unresolved maritime boundary disputes between the two nations surrounding claims to the fossil fuels located beneath the Timor Sea in what is known as the joint-venture area, the boundaries of which were established in 1989 between Indonesia and Australia. The revenue from refined hydrocarbons in the joint-venture area has been a 90/10 in favor of Timor-Leste since 2003. At the heart of this treaty however, is the Greater Sunrise gas field and the question of the equitable sharing of the estimated $40 billion in natural gas reserves contained beneath the water.
Joint Venture Area before 2018 Treaty Establishing Their Maritime Boundaries in the Timor Sea (La’o Hamutuk)
The negotiation of this treaty is an immense win for Timor-Leste both economically and diplomatically as the asymmetric power dynamic between Timor and Australia – or Timor and most nations – is a glaring reality. And the ability to do so should not be overlooked by ASEAN or the international community.
In the context of Australia, the historic imbalance of power was most notable at onset of the maritime negotiations in 2006. In the Treaty for Certain Maritime Arrangements in the Time Sea (CMATS), Timor agreed to not discuss a maritime boundary with Australia for 50 years, and to split the revenues of Greater Sunrise 50/50. However, only 20% of Greater Sunrise actually falls into the joint-venture area. Australian leverage came to a head after Timor-Leste discovered wiretapped government buildings through Australian espionage during a 2012 renovation compromising the legitimacy of previous negotiations. Timor brought the case to the Hague in 2015, calling for United Nations Compulsory Conciliation (UNCC) under the UN Convention on the Law of the Seas (UNCLOS), the first in history. In early 2017, both countries agreed to render CMATS void and enter into non-binding conciliation through the PCA, which resulted in the creation of the provisions of the Treaty Establishing Their Maritime Boundaries in the Timor Sea.
The treaty outlines a long-awaited maritime boundary, which falls directly between both nations as opposed to along the continental shelf. The exploration of Greater Sunrise, the methods for which are still to be determined with corporate partner Woodside Petroleum, will happen jointly. Additionally, the treaty states a splitting of revenue from Greater Sunrise that differentiates depending on where discovered gas is refined with an 80/20 split if resources are refined in Darwin or a 70/30 split if piped to a refinery that Timor plans to build off its southern coast.
Though the diplomatic feats for Timor go without question, the economic gains are most significant – especially as an aspiring ASEAN member. The joint-venture area has almost single-handedly financed Timor’s development over the last 15 years, with excess gains being invested through the Petroleum Fund for state revenue. An over-reliance on the Petroleum fund to support development, combined with lack of industry or manufacturing could have had detrimental effects on the Timorese economy. And with the global decline of oil prices, Timor-Leste requires not only a new source of revenue, but an opportunity to create jobs in a sustainable industry. Though the new treaty is not a move away from relying on fossil fuels, the benefits to the 70/30 split is job creation in the refinery sector and a decrease in the cost of fossil fuels imported from abroad. Successful job creation in a singular and sustainable economic sector makes Timor-Leste a more attractive state as it considers its entry into ASEAN.
Katie Dobosz Kenney holds an MS in Global Affairs from New York University with a concentration in Peacebuilding. An educator for almost 10 years, Katie had developed global and peace education curricula in Florida, Mississippi, and Timor-Leste. Katie currently works as a graduate program administrator at NYU’s Center for Global Affairs and has co-led study abroad programs to South Africa and the UAE.
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