Australia to end $50 billion feud
AUSTRALIA and East Timor have signed a treaty ending a long-running dispute over their maritime border, in a move which could unlock billions of dollars in revenue from offshore oil and gas.
The treaty is expected to provide a boost to East Timor's struggling economy by giving them more sovereignty over the Greater Sunrise, a lucrative oil and gas field located roughly 150km southeast of East Timor, and 450km northwest of Darwin.
The area has an estimated value of up to $50 billion.
The treaty was signed at the United Nations headquarters in New York by Foreign Julie Bishop and East Timor's Deputy Prime Minister Agio Pereira.
Ms Bishop said: "This treaty represents the importance of rules and the benefits of all states abiding by the rules.
"It required compromise and goodwill on both sides.
"It is an example to all of how international rules-based order serves our interests."
Ms Bishop said she hoped both states could "live peacefully and prosper together" and was pleased to be personally involved.
"With this treaty, we open a new chapter in relations between Australia and Timor-Leste.
"As good friends and close neighbours, we want Timor Leste to achieve its potential."
But some experts have warned that East Timor's success may spark a feud with another of our close neighbours.
WHY AUSTRALIA AND EAST TIMOR ARE SIGNING THIS TREATY
Australia and East Timor have been at loggerheads for the past decade over the Timor Sea.
East Timor, which is one of the world's poorest countries, was dependent on oil and gas for most of its revenue last year.
In 1989, when East Timor was still part of Indonesia, the governments of Australia and Indonesia signed what became known as the Timor Gap Treaty, which allowed both countries to share in the wealth of the Timor Gap equally.
In 2002 East Timor gained independence from Indonesia, but no permanent maritime border was established. That same year, Australia and the United Nations Transitional Administration in East Timor (UNTAET) negotiated the 2002 Timor Sea Treaty - a variant split 90-10 in favour of Timor, which applied to fields in the Joint Petroleum Development Area.
The country has since argued for a border in the median line between Australia and East Timor, which would give 100 per cent of these resources to the latter.
It's also likely to increase East Timor's ownership of the more lucrative Greater Sunrise. In 2002, Timor had just 18 per cent of its future revenues, which increased to a 50-50 split in 2006.
Now Timor could receive up to 80 per cent of the revenue from this lucrative field.
Ms Bishop said Greater Sunrise gas was a "crucial resource" that would need the support of private partners.
"Together, we can ensure Timor-Leste reaps the economic and social benefits for generations to come."
So what does Australia get out of this? Swinburne University's Professor in politics and international relations Michael Leach told news.com.au there are two major things to consider - our rocky relationship with East Timor, and China's territorial aims.
"For one thing, it puts to bed our difficult relationship with East Timor," he said. "We can already see the relationship is improving greatly - defence co-operation has resumed, and defence programs between the two countries are restarting."
The two countries have suffered a particularly tense relationship since 2012, when it was revealed Australia had been spying on East Timor's cabinet office to gather top secret information that would assist them in negotiations over the Timor Gap. It was on these grounds that the Timorese government sought to renegotiate our boundaries.
Prof Leach also argued this means Australia is now more consistent in its critique of China. He said that - while Australia rightfully argued against China's aggressive territorial claims in the South China Sea - it was taking a hypocritical standpoint by conducting similar actions against East Timor.
In 2016, China's state-run Global Times directly called Australia out on this in an opinion piece, accusing it of "exempting itself from the very conventions it cites in denouncing other nations' supposed violations of 'international law'".
Prof Leach said, with the signing of this treaty, China can no longer undermine our position on these grounds.
In September last year, the two governments issued a joint statement agreeing to negotiate on a permanent boundary.
The fields are estimated to hold 5.1 trillion cubic feet of gas and 226 million barrels of condensates, which analysts have previously estimated could be worth $US40 billion ($A51 billion). However, development could now be at least a decade away, with Woodside looking at the latter half of the next decade.
COULD INDONESIA POSE A THREAT?
For decades, Australia has managed to avoid renegotiating its boundaries with neighbouring Indonesia, but some experts have warned this treaty could that change.
This is because international law has shifted since we established our boundaries with Indonesia in the 1970s.
The ABC reported that the settlement of this dispute with East Timor could "unravel" our borders with Indonesia, arguing that setting the boundary with East Timor at the median point would "introduce a dogleg with the adjoining boundaries with Indonesia".
Writing in The Conversation when the treaty was announced last year, Professor Donald Rothwell from the Australian National University warned that Indonesia would use East Timor's success as a way to push to renegotiate our outdated laws.
"Australia's most complex maritime boundaries are with Indonesia. These have been carefully negotiated since the early 1970s, but reflect evolving legal rights and entitlements, some of which are out of step with international law in 2017," he wrote. "The challenge that may loom is whether Indonesia will use the precedent of a new Australia-Timor Leste treaty to reopen previously settled maritime boundaries with Australia."
But Prof Leach believes the issue isn't comparable.
"There is a risk, but I don't regard it as a high risk as some commentators do," he said. "It's a political risk, and Indonesia very well could decide to reopen that issue. But it's not a huge legal risk.
"There's a major difference between a boundary that was never settled in the first place - as was the case with East Timor - and a boundary that's been established and respected for 45 years, which is the case with Indonesia."
Theoretically, Indonesia could choose to raise the issue of the 1972 boundary, and Australia could bow to that pressure and agree to revoke the treaty.
But according to Prof Leach, it would be "very difficult" for Indonesia to renegotiate.