East Timor-Australia maritime border to be negotiated before United Nations: Careful what you wish for

Reports about my hospitalisation for post Easter stomach-pumping have been greatly exaggerated. Who knew that the human body had an upper limit of tolerance for chocolate?

My physician has advised a drastic reduction in chocolate consumption - impossible when you live in Switzerland.  It seems that my dream of living inside chocolate heaven and eating my way out would has a dark side.

So what else has been going on in the world ..... there have been developments on my favourite maritime border dispute with huge implications for oil and gas resources in Australia. It looks like East Timor is going to get what they have wished for.  Today Matthew Doran writes in SMH that Timor is taking Australia to the United Nations to solve the dispute over its maritime border under international maritime law. Timor has long argued current arrangements mean it is missing out on billions of dollars in revenue from offshore oil and gas fields. It has now approached the UN to begin a formal conciliation process conducted by an independent panel of experts.

Timor has been trying to wriggle out of its current Treaty arrangements and to settle the border dispute for some time. There have been a number of protest rallies in East Timor, the last  one reportedly taking place on 30 March, according to the SMH and the Guardian.  The Timorese claim that they have lost $6.6 billion in oil and gas revenues to Australia under the current Treaty arrangements for resource sharing. Instead, Timor believes that if the maritime boundary was at the half way point between the two countries, most of the oil and gas reserves in the Timor Sea would lie within their territory.  In response, there is no particular response from the Australian government, who is happy to talk but not about the border dispute.  Julie Bishop was busy touring Indonesia and opening the new embassy building in Jakarta, the largest constructed by Australia. DFAT updated its travel advice on 21 March (asking travellers to exercise a high degree of caution). Apparently, some some embassy employees from Dili got gardening leave back in Canberra.  Never mind, they can enjoy, along with Witness K, the Kingston cafes and the balmy autumn sunshine that Canberra is known for at this time of year.

Why is this all so hard? Well, Timor believes if the maritime boundary was decided under the UN Convention on the Law of the Sea (UNCLOS),  most of the oil and gas reserves in the Timor Sea would lie within their territory.  However, Australia has withdrawn from the maritime boundary jurisdiction of UNCLOS.  In 2002 Australia made a declaration excluding the setting of maritime boundaries from compulsory dispute resolution, the view being that any maritime boundary dispute is best settled by negotiation rather than litigation.

So what does that mean? - a Convention is an agreement between countries, usually developed by the UN or other international organizations. Governments that ratify Conventions have to incorporate them into their own (domestic) laws and to make sure that they are applied and respected. At the time of agreeing to a Convention, Governments can also say that they do not agree with certain parts of its text.  These are called distinctions, restrictions, exclusions, etc.  So even once ratified, Conventions will not apply to exclusions.  This means that although Australia applies UNCLOS, they do not agree that those mechanisms described in it, will be applied by Australia for maritime boundary issues.  This is important for this case,  because the first problem to be solved is to decide who can make the decision on where the border between Australia and East Timor lies.

Lets face it, I could make the decision, but nobody would listen to me - so it has to be an authority that both sides will respect.  Timor latest attempt is to ask the UN to begin a formal conciliation process conducted by an independent panel of experts.
So watch this space...  This opens up a whole lot of other questions - like how will this panel operate, who is qualified to be on this panel, and is it possible for Timor to get a better deal than they already have... and  many more.

Browse, North West Shelf back on the shelf - implications for other possible white elephants

Australia's hopes of the resources boom continuing have well and truly faded.  There was further bleak news with the announcement by Woodside and its energy giant partners, last week that they would put the $40 billion Browse back on the shelf, indefinitely.  Pardon the pun! Its no joke.

The North West Shelf is an extensive oil and gas region off the coast of Western Australia, in the Indian Ocean.  The region has estimated hydrocarbon reserves of 33 trillion cubic feet (930 km3).  It is Australia’s largest resource development project and has a considerable number of oil and gas wells, pipelines, production areas and support facilities.  It involves the extraction of petroleum at offshore production platforms, onshore processing and production and export of liquefied natural gas. This was the largest engineering project in the world in the early 1980’s with investments so far of around $A 25 billion.  Only about one third of the reserve is estimated to have been produced to date. Woodside is the project operator, along with five other partners: BHP Billiton; BP; Chevron; Royal Dutch Schell (which also owns 24% of Woodside through Shell Australia); Japan Australian LNG (a venture between Mitsubishi and Mitsui).  There's a nice map on Wikipedia.

The main reason given for this delay is the current low oil price and the LNG price in a similar slump, combined with the large volumes of LNG currently coming onto the market from other Australian projects.  Large volumes are also expected from the US in the coming years.  The circumstances have conspired to create a situation of over-supply and weak demand.

A recent report in the International NY Times (INYT) suggests that similar shelving could be on the cards for other 'potential white elephant' projects in Canada and Mozambique, for example.  The INYT also reports that Australia's woes have been exacerbated by an LNG price war with Qatar, and predicts that demand for LNG will not improve until after 2023.

Those following this blog would know of my preoccupation with the development of the Greater Sunrise area.  My recent prediction that the joint development between Australia and Timor L'Este is likely to languish in the ‘too hard’ basket, or the 'white elephant' basket, might just come true.  I said in my previous post, some commentators are projecting that thirty years from now there will be a huge amount of oil available – but no buyers. Maybe we won't have to wait that long for that to be a reality.