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Office of the Prime Minister
Media Release

Timor Sea Treaty enters into force

Wednesday 2 April 2003

Today in Dili, following an exchange of notes between Timor-Leste Prime Minister Mari Alkatiri and the Australian Ambassador to Timor-Leste Paul Foley, the Timor Sea Treaty entered into force.

The Treaty provides for the sharing of petroleum production and taxation rights between Timor-Leste and Australia in one part of the Timor Sea which lies on Timor-Leste’s side of the median line between the two countries.  Under the terms of the Treaty, Timor-Leste will receive 90 per cent of production and taxation rights, and Australia 10 per cent.  Timor-Leste also gains administrative control over the Treaty area through the creation of a new Timor Sea Designated Authority.

Timor-Leste Prime Minister Mari Alkatiri said today at the exchange of notes ceremony:  ‘This is a happy day for Timor-Leste and Australia.  From today, we have a clear legal framework for petroleum investment in one part of the Timor Sea.’

The Treaty was signed on 20 May 2002 by Prime Minister Alkatiri and Australian Prime Minister John Howard.   The Timor-Leste Parliament ratified the Treaty on 17 December of last year; the Australian Government completed its ratification process today. 

At the ceremony, Prime Minister Alkatiri noted that there had already been significant work carried out by investors and governments to bring petroleum fields in the Treaty area, including the Bayu-Undan, Greater Sunrise, Jahal and Kuda Tasi fields, to production.

The first major development in the Treaty area will be the Bayu-Undan development.  That development will  proceed under the terms of a gas development plan which the governments and investors expect to finalise in coming weeks.   The gas development of Bayu-Undan is estimated to bring total revenues to Timor-Leste, over the 17 year life of the field, of US $3 billion.  The project will also bring significant economic benefits to Australia, both from upstream revenue and from the proposed location of gas processing facilities in Darwin.

Prime Minister Alkatiri emphasized that the Treaty, though it provides a clear legal framework for some investment, does not provide a permanent or comprehensive framework.

A permanent framework can only be provided by permanent maritime boundaries, which unfortunately Timor-Leste does not yet have,’ He said.  ‘But as a temporary revenue sharing arrangement, the Treaty represents a good interim measure until maritime boundaries are agreed.’

 Media enquiries:  Zoe Cottew +670 723 4156

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
Rua D. Alberto Ricardo, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-77234330
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