Timor’s Gas - Clawback or Payback?

Timor’s Gas  - Clawback or Payback?

After the shakedown comes the clawback. East Timor’s relations with Australia reads more and more like a morality tale.  “Shakedown” is the title of the book written by Paul Cleary describing Australia’s bullying, and at times thuggish tactics in getting far more than its fair share of the oil and gas in the Timor gap.  In fact, Australia came close to getting virtually all of it

Fortunately, due to the efforts of some left wing Labour politicians working with Timorese representative (now President of Timor Leste) Jose Ramos Horta, the UN refused to recognise the Indonesian ‘sovereignty’ over East Timor, but the Hawke government, fawning over the ‘Indonesian Lobby’ in DFAT with the Foreign minister of the era, Gareth Evans, sealed a deal of dubious legitimacy in international law, with the Indonesian government, over the ‘Timor Gap’ gas and oil reserves.

East Timorese independence was a big monkey-wrench in the works, and it put the international arrangements between Australia and Indonesia into a spin that – well … drew a bit more international attention than Timor Leste had attracted (apart from human rights activists) previously. Paul Cleary’s book documents how the Australian government tried to bully the East Timorese into passing the former (internationally illegitimate) agreement with Indonesia, on to the newly independent Timorese, that gave the Australian government rights to gas and oil exploitation that were frankly, unacceptable under international conventions.

Prime Minister Xanana Gusmao’s recent broadsides against the Australian government have been variously interpreted. But few media commentators acknowledge the history of Australian bastardry in its relations with Timor Leste.

PM Xanana lashed out recently with a series of attacks on Australian treatment of East Timor. He even goes so far as to bring up the actions of the Australian ‘Sparrow’ force in World War Two that brought down heavy Japanese reprisals on the East Timorese. Observers put this down to Xanana’s sometimes ‘erratic’ style and a tendency to posture. Others attribute it to an attempt to shore up weakening support for his government in East Timor. Jose Ramos Horta’s recent visit to Australia was probably timed to smooth some ruffled diplomatic feathers.

But there could be method in Xanana’s ‘eccentricity’. The row is part of the continuing discourse of who really benefits from the gas reserves in the Timor Gap, and even the Timorese PM’s political opponents are with him on this one.

When Woodside Petroleum decided to develop one of the larger gas fields they were hoping to build the refinery in Darwin. The Timorese pointed out that Timor Leste was much closer. Woodside responded that there was a large seabed trench that negated to geographical proximity of Timor. After a year Woodside opted for an experimental floating refinery on the gas field itself. The Timorese objected to this proposal claiming that the seabed pipeline to Timor had not been properly studied. Independent research organisation Lao’ Hamatuk agree, and even some Australians point out that the surge in development and employment opportunities in Timor would ultimately be to Australia’s benefit too, in terms of greater stability and easing of the Australian aid burden to Timor in the future.

Under the terms of the Gap Treaty, all parties have to agree to the development of any of the ‘shared’ resource fields. This means that if Timor Leste is not convinced, the Timorese government can effectively block the development of the field indefinitely.

And therein lies the crux of the matter. In the next decade or so the current Gap Treaty expires and the seabed boundaries will have to be renegotiated. It would be to Timor Leste’s advantage to simply leave the gas in the seabed, steadily appreciating in value, and renegotiate the Treaty from a position of much greater strength than they were in formerly.

The current treaty was negotiated with the Timorese under great duress. It was during the first years of independence when the country had been virtually razed to the ground by the departing Indonesians. Money was urgently needed for reconstruction. The Australian negotiators exploited this urgent, indeed desperate need to force the Timorese to accept less than their fair share of the oil fields, while themselves refusing to accept the arbitration of the UN that would have delayed development for several more years.

Now that some of the benefits of the current development are starting to trickle into the country the Timorese aren’t so easily subjected to this kind of economic blackmail. It is they who can now afford to play the waiting game and redress the balance.

Warwick Fry