Timor-Leste has no maritime boundaries with its neighbours, Australia and Indonesia, nor has it ever had maritime boundaries. An agreement on permanent maritime boundaries with Australia and Indonesia would define for the first time the extent of Timor-Leste's maritime territory.
The revenue derived from the Timor Sea Treaty with Australia will be crucial for Timor-Leste's early years of independence. Timor-Leste will only secure long-term economic independence by having full access to the resources of the Timor Sea that belong to it under international law. In the coming decades, Timor-Leste is likely to earn an estimated l US$5 billion in revenue under the Treaty. However, if Timor-Leste and Australia were to agree to permanent maritime boundaries that are consistent with international law, Timor-Leste would be entitled to about three times this amount.
The Timor-Leste Maritime Zones Act
At the first sitting of the Timor-Leste National Parliament on 20 May 2002, Prime Minister Alkatiri introduced the Maritime Zones Act (MZA). The MZA claims for Timor-Leste its Exclusive Economic Zone (EEZ) and seabed (continental shelf) entitlement extending 200 nautical miles from Timor-Leste's coast, pending an agreement on boundaries with its neighbours. See map. The MZA became law in July 2002. The MZA is based on international law, notably the 1982 United Nations Convention on the Law of the Sea (UNCLOS).
Establishing Maritime Boundaries with Australia
There is an area of overlap between Timor-Leste's potential maritime entitlement, as expressed in the MZA, and that of Australia. A large part of the Timor Sea, including the entire Timor Sea Treaty area and the Greater Sunrise, Buffalo, Laminaria and Corallina fields, is the subject of these overlapping claims. According to UNCLOS, which sets out relevant international law, a maritime boundary between Timor-Leste and Australia should be drawn to achieve an equitable result.
International law would set the frontal boundary dividing the Timor Sea into northern and southern parts as an equidistance line (or halfway line) between Timor-Leste and Australia. It should be noted that the entire Timor Sea Treaty area lies on the Timor-Leste side of the equidistance line. See map.
A boundary drawn according to international case law would set lateral boundaries dividing the eastern and western parts of the Timor Sea in such a manner as to give Timor-Leste a significantly wider area than the Timor Sea Treaty area. These wider lateral boundaries would give Timor-Leste most - if not all - of the Greater Sunrise field, and the Buffalo, Laminaria and Corallina fields. All of these fields are located at least twice as close to Timor-Leste as they are to Australia.
On 25 March 2002, less than two months before Timor-Leste's independence, Australia withdrew its consent to the maritime boundary jurisdiction of the International Court of Justice, and to any dispute resolution bodies under UNCLOS. This action makes it difficult for Timor-Leste to seek the decision of an independent court regarding the equitable location of its maritime boundaries with Australia. It has also influenced the tenor of negotiations between the two nations.
Regular talks between both countries commenced in April 2004, and after an intensive round of meetings in September and October that year, two meetings are expected to take place in 2005. The Government of Timor-Leste would like to meet more regularly in order to resolve this dispute expeditiously.
Australia's obligation of restraint
According to international law, states have an obligation to refrain from exploiting resources in areas of overlapping claims when maritime boundaries are yet to be agreed. This means that, except where interim joint development agreements such as the Timor Sea Treaty have been concluded, neither Timor-Leste nor Australia should allow exploitation of resources in disputed areas of the Timor Sea.
Despite this obligation, Australia is unilaterally exploiting the Laminaria, Corallina and Buffalo fields, which lie just outside the Timor Sea Treaty area and fully within Timor-Leste's claim. Timor-Leste has not received one cent of the estimated US$2.5 billion that Australia will collect from these fields. Further, on 22 September April 2003, Australia awarded a new permit in an area adjacent to the Greater Sunrise field (Permit NT/P65). This was only weeks after Timor-Leste and Australia had signed the Greater Sunrise unitisation agreement, and months after Prime Minister Mari Alkatiri had written to the Australian Prime Minister asking that Australia exercise restraint in areas of overlapping claims in the Timor Sea in accordance with its obligations under international law.
In March 2004 Australia advertised blocks in the disputed areas to the east and west of the JPDA, and is expected to award them in 2005. This action was again challenged by Prime Minister Alkatiri. See press statement. See map showing blocks issued and advertised by Australia in the disputed areas.
This ongoing exploitation makes an agreement between Timor-Leste and Australia on maritime boundaries all the more urgent.
Establishing Maritime Boundaries with Indonesia
The Timor-Leste Government has invited the Indonesian Government to begin talks on establishing permanent maritime boundaries between the two countries.