Related Articles
Forward article link
Share PDF with colleagues

Espionage claims set back Greater Sunrise gas field

Timor Leste is accusing Australia of espionage, delaying the development of the gas field

Timor Leste is formally accusing Australia of espionage during the 2004 negotiations for a treaty covering the development of the Greater Sunrise gas field, worth billions of dollars, in the Timor Sea.

The formal arbitration process has capped any optimism that the Woodside Energy-led joint venture, whose partners include Shell, ConocoPhillips and Osaka Gas, could sign off on a development plan for the stalled project, which lies in the Timor Sea's shared joint development area with Australia, by the end of this year.

The validity of a resource sharing pact - the Treaty on Certain Maritime Areas in the Timor Sea (CMATS) - is being challenged by Timor Leste, based on what it claims is irrefutable evidence that Australia spied on its negotiating team.

Canberra says the allegations are not new, but successive Australian governments have chosen not to confirm or deny them.

Timor Leste's minister of petroleum and mineral resources, Alfredo Pires, told Petroleum Economist that his government had no choice but to push legal proceedings after moves to negotiate the matter with Canberra, initiated in December last year, failed.

Under CMATS, Dili gets 50% of Sunrise revenues, once the fields are on stream, instead of the 18.1% it would get under the Sunrise International Unitisation Agreement (IUA), which provides the legal basis for the development.

Based on international legal principles, which would draw a boundary along a median line, all of Sunrise would belong to Timor Leste and the country could develop it as it pleased. But Australia has refused to give ground in boundary negotiations.

Sunrise's uncertain future came back into focus earlier this year as a termination trigger for CMATS came into play.

Terminating CMATS would allow the East Timorese to air long-standing grievances about the maritime border and existing Timor Sea developments.

But cancelling CMATS runs the risk of terminating other treaties, particularly the IUA and Timor Sea Treaty, which governs the joint petroleum development area between the two countries, and would create a judicial mess.

Pires says it's better to invalidate only CMATS and come up with a new arrangement that provides permanent fiscal certainty for investors.

If CMATS is invalidated, Pires expects Canberra and Dili to reach a solution that offers greater certainty to investors and a more equitable outcome for Timor-Leste in accordance with international law.

Donald Rothwell, a professor of international law at the Australian National University told ABC Australian Radio that the formal arbitration marks a significant development as Canberra has always tried to settle its maritime boundaries by negotiation.

A three-person tribunal appointed by Australia and Timor Leste will now be established to consider the case.

Under the arbitration process, which started on 23 April, each government has 60 days to appoint an arbitrator. The pair will then appoint a third arbitrator and the trio will have six months to make a decision on the case.

The Greater Sunrise project has been in limbo for years. Aside from the unresolved maritime border between Timor Leste and Australia, the best development plan is itself a matter of dispute. Dili insists the gas be processed onshore, in Timor Leste, while the Woodside-led joint venture has previously pushed a floating liquefied natural gas scheme.

Analysts say the fiscal uncertainty created by the arbitration process will only serve to delay an investment decision on the project further.

A Woodside spokesman says the Perth-based company is reviewing the proposed arbitration and will continue to engage with both governments to further understand any consequences of the action.

Also in this section
Saudi Arabia's Vision 2030 looks blurry in Khashoggi aftermath
18 October 2018
International reaction to the disappearance of prominent Saudi journalist Jamal Khashoggi will lead, at very least, to delays to the kingdom’s ambitious reform programme
South Africa urgently seeking gas as energy transition stalls
18 October 2018
South Africa’s power sector plans envisage a big role for gas, but first the country needs to find the feedstock
Senegal and Guinea-Bissau deal faces domestic pressures
17 October 2018
Guinea-Bissau is eager to kick start exploration in acreage shared with oil-rich Senegal, but it’s slow going