CANBERRA, Australia (AP) — Australia’s Parliament has approved the ratification of a maritime boundary treaty signed with East Timor 16 months ago and is now under pressure to return revenue from a seabed gas field that solely belongs to the poor half-island nation.
The Parliament late Monday passed legislation enabling ratification of the treaty, a week after Australia’s impoverished neighbor voted in favor of similar legislation that governs how the two countries will share billions of dollars of oil and gas riches lying beneath the Timor Sea.
The treaty was signed in New York in March last year, but won’t take effect until it is ratified by an exchange of diplomatic notes when Prime Minister Scott Morrison visits East Timor on Aug. 30.
Australia will continue earning 10% of the royalties from the Bayu Undan oil and gas field until then, when East Timor takes full ownership of the field which is expected to be empty within a few years.
East Timorese independence hero and the country’s chief negotiator on the treaty, Xanana Gusmao, said his country was losing $5 million a month while the agreement remained unratified.
Donald Rothwell, an Australian National University expert on international law, said on Tuesday that a provision of the treaty stipulated that no compensation was to be paid to either party as a result of the new border arrangements.
“Once the treaty becomes operative, there is no obligation at all on Australia to pay any type of compensation, as some calls have been made to that end,” Rothwell said.
Steve Bracks, a former Victoria state premier and founder of the Timor-Leste Governance Project aid organization, described Australia continuing to take revenue from Bayu Undan as “pretty outrageous.”
Under the treaty, East Timor will get the biggest share of revenue from exploiting the untapped Greater Sunrise gas field. It will be split either 80-20 if gas is piped to Australia for processing or 70-30 if it is piped to East Timor.
East Timor wants the gas to be processed in its territory but investors are wary because it may not be economically viable.
East Timor’s oil revenues, which finance more than 90 percent of government spending, are rapidly dwindling due to the exhaustion of existing fields in its territory. The country’s $16 billion sovereign wealth fund could be empty within 10 years because the government’s annual withdrawals are exceeding its investment returns, according to La’o Hamutuk, an East Timorese research institute.
