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East Timor, Australia Scrap Oil, Gas Treaty Amid Boundary, Espionage Row

Offshore Drilling

Australia and East Timor have agreed to tear up a temporary treaty regulating maritime boundaries in the latest development in a long-standing dispute that has involved sea boundary claims, oil and gas revenue sharing disputes, and espionage.

In a joint statement issued on Monday, Australia and East Timor said that they would be scrapping the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea, as requested by East Timor, with Australia recognizing its neighbor’s right to initiate termination of the treaty. After this treaty ceases to be in force in three months, the two countries will be using a previous pact, the Timor Sea Treaty from 2002, to regulate temporary boundaries.

Since East Timor gained independence from Indonesia in 2002, Australia and East Timor were unable to establish permanent maritime borders to regulate how much each of the countries should receive in oil and gas revenues from the basin within their borders—revenues estimated at billions of dollars.

The Law of the Sea and established practice say that a boundary would be settled at equal distance between two countries. This would place most of the potentially prolific Greater Sunrise oil and gas fields in East Timor’s territory. Australia, however, has always claimed that the boundary should be at the edge of Australia’s continental shelf, closer to East Timor’s land.

Related: Will Natural Gas Go On Another Run In 2017?

Relations turned even sourer when it emerged in 2013 that Australia had been spying on East Timor’s cabinet ministers while negotiations for the 2006 treaty were underway.

In Monday’s statement, Australia and East Timor reaffirmed their commitment to “negotiate permanent maritime boundaries”.

In April of 2016, East Timor initiated compulsory conciliation proceedings against Australia at the Hague-based Permanent Court of Arbitration. The court said in October that the parties and the court’s commission would hold meetings over the next year to seek a permanent solution.

Related: Platts Sees OPEC Cuts Eliminating Oversupply By Q3

Today’s commitment to negotiate permanent boundaries was welcomed by Australia’s Woodside Petroleum, which has an interest in the Greater Sunrise gas fields.

“Woodside understands the Timor Sea Treaty remains in place and we look forward to an agreement that allows for the earliest commercialisation of the Greater Sunrise fields, which promise great benefits for all parties,” a spokeswoman for Woodside told Australia’s news outlet ABC.

By Tsvetana Paraskova for Oilprice.com

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