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Memorandum of Understanding of Timor Sea Arrangement
Date:	5 July 2001
Sub Category:	Memorandum of Understanding
Place:	Timor Sea between East Timor and Australia
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State/Country:	East Timor and Australia
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Subject Matter:	Economic Development \| Mining and Minerals \| Petroleum \| Marine
Summary Information:
The Memorandum of Understanding of Timor Sea Arrangement (MoU) was signed between the Government of Australia and the United Nations Transitional Administration in East Timor (UNTAET) in Dili on 5 July 2001. The MoU was entered into in anticipation of the independence of Timor Leste (East Timor) in May 2002, and in anticipation of a new Timor Sea Treaty to be entered into between Timor Leste and Australia. Negotiations with the UNTAET, however, could not bind a future East Timorese government; the MoU was a practical way of working out important issues relating to resource exploitation in the political climate of uncertainty prior to the independence of Timor Leste and secured the continuation of the development of the petroleum resources, formerly within Zone A of the ZOC under the Timor Gap Treaty. (See map).
Detailed Information:
The MoU basically sets out the terms and conditions (Attachment 'A' ) of the anticipated new Timor Sea Treaty. It contains the following wording: ' Attachment 'A' to this understanding is suitable for adoption as an agreement between Australia and East Timor upon East Timor's independence, embodying arrangements for the exploration and exploitation of the Joint Petroleum Development Area pending a final delimitation of the seabed between Australia and East Timor'. The MoU formed the Joint Petroleum Development Area (JPDA) which is basically the same as Zone A of the Zone of cooperation (ZOC) created under the Timor Gap Treaty. The MoU states that 'within the JPDA East Timor and Australia shall jointly control, manage and facilitate the exploration, development and exploitation of the petroleum resources of the JPDA for the benefit of the peoples of East Timor and Australia.' (Article 3(b)). However, joint development was on the basis that 90% of revenues would flow to East Timor and 10% would flow to Australia (Article 4 (a)), instead of the 50/50 split under the Timor Gap Treaty. A particularly important issue to be resolved was that of the Sunrise and Troubadour petroleum deposits (collectively known as 'Greater Sunrise') 20% of which were within the new JPDA (see map). Under the MoU it was anticipated (Annex E) that East Timor and Australia agree to unitise the deposits and distribute production on the basis that 20% is attributed to the JPDA and 80% to Australia; the 20% to be distributed in accordance with Article 4(a) of the MoU (above). The MoU did not resolve the question of the seabed boundary between East Timor and Australia. Instead, the MoU was specifically stated not to prejudice or affect 'East Timor's or Australia's position on, or rights relating to a seabed delimitation or their respective seabed entitlements.' (Article 2(b)). The MoU states that arrangements will be in force until there is a permanent seabed delimitation between East Timor and Australia or for thirty years from the date of entry into force of the arrangements, whichever is sooner. Other issues addressed in Attachment A to the MoU are: Fiscal arrangement and taxes (Article 5); The establishment of a three-tiered joint administrative structure consisting of a Designated Authority, a Joint Commission and a Ministerial Council (Article 6); Negotiation of an agreed petroleum code (Article 7); The construction and operation of pipelines (Article 8); Unitisation of petroleum reserves (Article 9); Protection of marine environment (Article 10); Employment (Article 11); Health and safety of workers (Article 12); Taxation laws (Article 13); Criminal jurisdiction (Article 14); Customs, quarantine and migration (Article 15); Hydrographic and seismic surveys (Article 16); Safety, operating standards and crewing of petroleum industry vessels (Article 17); Surveillance (Article 18); Security Measures (Article 19); Search and Rescue (Article 20); Air traffic services (Articl 21); and Settlement of Disputes (Article 23).