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Timor Sea Treaty
Date:	20 May 2002
Sub Category:	Treaty (International)
Place:	Timor Sea between Australia and East timor
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State/Country:	East Timor and Australia
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Subject Matter:	Economic Development \| Mining and Minerals \| Petroleum \| Exploration
Summary Information:
The Timor Sea Treaty (the Treaty) was signed between the Government of East Timor and the Government of Australia on 20 May 2002. The Treaty enabled the ongoing joint development of petroleum resources in an area of seabed between Australia and East Timor, which had been the subject of an earlier 1989 Timor Gap Treaty between Australia and Indonesia. Once the Treaty came into force, in April 2003, the 1989 Timor Gap Treaty no longer had any effect. From the date of entry into force, all the provisions of the Treaty take effect retrospectively to May 2002, the date of independence of East Timor. The Treaty was made pursuant to a Memorandum of Understanding made between the government of Australia and the United Nations Transitional Administration in East Timor made on 5 July 2001, which made tentative arrangements for the continuing joint development of the resources once East Timor gained independence in May 2002. The Treaty has the same terms and provisions as the 2001 Memorandum of Understanding and establishes a Joint Petroleum Development Area (JPDA) which is the same area as Zone C of the Zone of Cooperation in the 1989 Timor Gap Treaty (see map).
Detailed Information:
The Treaty 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 is 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 1989 Timor Gap Treaty. A particularly important issue to be resolved was that of the Sunrise and Troubadour petroleum deposits (collectively known as 'Greater Sunrise') which straddles the eastern lateral boundary of the new JPDA (see map). Annex E to the Treaty states: '(a) Australia and East Timor agree to unitise the Sunrise and Troubadour deposits (collectively known as 'Greater Sunrise') on the basis that 20.1% of Greater Sunrise lies within the JPDA. Production from Greater Sunrise shall be distributed on the basis that 20.1% is attributed to the JPDA and 79.9% is attributed to Australia.' The 20.1% of the deposit lying within the JPDA is to be distributed in accordance with Article 4(a) of the Treaty ie 90% to East timor and 10% to Australia. For historical reasons which relate back to Portuguese control of East Timor, a seabed boundary, in the area of sea the subject of the Treaty, has not been capable of resolution. A portion of the seabed boundary between East Timor and northern Australia, called the 'Timor Gap', is still to be delineated. This fact posed a potential hindrance in relation to the exploitation of resources within the seabed area. East Timor were also disputing the position of the eastern lateral boundary of the JPDA over which straddles the Greater Sunrise deposit .However, in the same way as the 1989 Timor Gap Treaty, the Treaty contains Article 2(b) (effective at international law) which allows both countries to jointly exploit the oil resources of the area without prejudicing their long term rights to negotiate a permanent boundary at some point in the future (Triggs 2004:338). The Treaty states that it 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. The Treaty, is inextricably linked with an International Unitisation Agreement for the Greater Sunrise petroleum deposits. This Agreement was signed on 6 March 2003 but has not yet come into force. Despite agreement in the Memorandum of Understanding of Timor Sea Arrangement of 5 July 2001, that resolution of the boundary dispute over the 'Timor Gap' would not be dependent upon negotiation of some form of unitisation of Greater Sunrise, Australia insisted that it could not ratify the Treaty 'unless and until East Timor had agreed to the terms of the International Unitisation Agreement for Greater Sunrise.' This was a situation that was not in the interests of East Timor (Triggs, 338). It is possible for disputes over martime boundaries to be settled through an international dispute settlement procedure. However, in March 2002 the Australian government withdrew its consent to have the matter dealt with before the International Court of Justice (Bialek, 1). Other issues addressed in the Treaty 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 mining 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); Application of 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 (Article 21); and Settlement of Disputes (Article 23).