Australia and East Timor agree sea border in deal worth billions in oil revenue

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Australia and East Timor have signed a historic treaty drawing their maritime boundary, ending years of bitter wrangling over billions of dollars of oil and gas riches lying beneath the Timor Sea and opening a new chapter in relations.

The agreement was doubly historic because it also marked the successful conclusion of the first-ever negotiations to settle maritime differences under the UN Convention on the Law of the Sea — a process that Secretary-General Antonio Guterres urged other countries to use to peacefully resolve such disagreements.

Before a crowd of cameras, diplomats and officials, two copies of the treaty were signed by Australia’s foreign minister, Julie Bishop, and East Timor’s minister for delimitation of borders, Hermenegildo Augusto Cabral Pereira.

The chairman of the independent Conciliation Commission that led negotiations, Danish Ambassador Peter Taksoe-Jensen, then signed as a witness.

“It is a landmark event for our two nations, but also for international law,” Ms Bishop said. “Both our governments have deemed this to be a just and equitable outcome.”

Mr Pereira agreed, saying: “Today is indeed a momentous day that will be recorded in East Timor’s history and be remembered and celebrated. … With the signing of this treaty today, we write a new chapter in the friendship between our two countries.”

For East Timor, a half-island nation of 1.5 million people who are among the poorest in the world, the treaty is crucial to economic development and employment opportunities.

Mr Pereira said 65%, mostly young people, are looking for jobs.

Ms Bishop told reporters that under the treaty East Timor will get the biggest share of revenue from exploiting the oil and gas.

It will be split either 80-20 if gas is piped to Australia for processing or 70-30 if it is piped to East Timor, she said.

“We are talking billions of dollars over the life of such a resource project,” Ms Bishop said.

Mr Pereira said companies have told East Timor that it is feasible to build a pipeline to the country.

“We believe seriously that a successful pipeline to the south coast of Timor would be a game changer and have a transformational impact on the socio-economic status of the country,” he said.

The dispute has dominated and soured relations since 2002, when East Timor emerged as a fledgling nation independent of Indonesia.

The terms of the deal negotiated under the Conciliation Commission in The Hague, Netherlands, through the Permanent Court of Arbitration are expected to be made public shortly, Australian diplomats said.

East Timor achieving its ambition of a border midway between the two countries could encourage Indonesia to renegotiate its own much longer maritime boundary with Australia, agreed in 1971 under outdated international law.

The Indonesian border with Australia extends east and west of the new East Timor-Australia boundary and the vast expanse Indonesia allowed Australia is a source of increasing irritation for the Indonesian government.

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