Agreements, Treaties and Negotiated Settlements Project

Agreement between the Government of Australia and the Government of the Democratic Republic of Timor-Leste relating to the Unitisation of the Sunrise and Troubadour fields
Date:	6 March 2003
Sub Category:	Treaty (International)
Place:	Timor Sea between Australia and Timor-Leste
State/Country:	Democratic Republic of Timor-Leste and Australia
Alternative Names:	International Unitisation Agreement Sunrise IUA
Subject Matter:	Economic Development \| Mining and Minerals \| Petroleum
Summary Information:
The Agreement between the Government of Australia and the Government of the Democratic Republic of Timor-Leste relating to the Unitisation of the Sunrise and Troubadour Fields ('the Agreement') was signed in Dili on 6 March 2003. However, the Agreement is not yet in force. The Agreement is intended to provide for legal certainty in the commercial exploitation of the Sunrise and Troubadour petroleum deposits, collectively referred to as 'Greater Sunrise'. The Greater Sunrise deposit straddles the eastern lateral boundary of the Joint Petroleum Development Area (JPDA), an area agreed to in the 2002 Timor Sea Treaty (see map). For historical reasons which date back to Portuguese control of East Timor, a seabed boundary between the Democratic Republic of Timor-Leste (DRTL) and Australia in the area of sea being the JPDA of the 2002 Timor Sea Treaty and of this Agreement (known as the 'Timor Gap') has not been capable of resolution. The DRTL is 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 Timor Sea Treaty and the Agreement contain clauses (effective at international law) which allow both countries to jointly exploit the oil resources of the area without prejudicing their long term rights to negotiate maritime boundaries at some point in the future. The Timor Sea Treaty and the Agreement have become inextricably linked. A prior Memorandum of Understanding of Timor Sea Arrangement contained a provision that resolution of the Timor Gap issue (as provided for in the 2002 Timor Sea Treaty) was not to be dependent upon negotiation of some form of unitisation of the Greater Sunrise deposit. However, Australia reneged on this understanding and linked together the negotiation of the Timor Sea Treaty and the Agreement (Triggs 2004: 338). However, agreement on the JPDA and the unitisation of Greater Sunrise, in each case on the basis that the rights of both states in relation to their maritime boundaries are not prejudiced is 'a unique international compromise that successfully combines joint development of the resources of the disputed seabed area with unitisation of a deposit that straddles part of the joint development area' (Triggs 2004: 241). However if the Agreement fails to enter into force, the petroleum resources of the area may not be exploited due to the uncertainty that the present unresolved situation creates. The Greater Sunrise deposit is estimated to yield in excess of $A35 billion over the project's life and more than $8 billion in taxes for the Australian Government and the DRTL (Bialek 3).
Detailed Information:
The Agreement acknowledges that: exploration has proved the existence of petroleum deposits in the Greater Sunrise field; Australia and the DRTL have made maritime claims but not yet delimited their maritime boundaries, including in the area of the Timor Sea where Greater Sunrise lies; the states desire, before production commences, to make provisions for the integrated exploitation of Greater Sunrise; the states agreed under Annex E of the Timor Sea Treaty to unitise Greater Sunrise on the basis that 20.1% of the deposit lies within the JPDA and that production from the deposit be distributed on the basis that 20.1% is attributed to the JPDA and 79.9% attributed to Australia. (This is set out in Article 7 of the Agreement); and the states agree to work expeditiously and in good faith to conclude a unitisation agreement for Greater Sunrise in accordance with the Memorandum of Understanding between the states of 20 May 2002.