...continued

After the signing of the Timor Gap treaty, Jose Ramos Horta commented to the Sydney Morning Herald that though Foreign Minister Evans and Prime Minister Bob Hawke "have previously said that East Timor is too poor to achieve self- determination, . . . they are exploiting its natural resources which, according to the Law of the Sea Convention, are in East Timor's exclusive economic zone." The Security Council recognized, in its resolutions deploring the invasion (Resolution 384 of December 22, 1975, and 389 of April 22, 1976), "the inalienable right of the people of East Timor to self-determination and independence."

East Timor had been a Portuguese colony since the sixteenth century. After its dictatorship fell in 1974, Portugal began to pull back, and in November 1975, East Timor declared independence. Ten days later, Indonesia invaded and sacked Dili, the Timorese capital. Survivors from the short-lived government and Fretilin, the pro-independence party, retreated to the hills and began a guerilla resistance which continues today. Indonesia eventually captured most of the Timorese countryside through a strategy of massacre and starvation. Estimates of the death toll range as high as one-third of the Timorese population.

Though Portugal never recognized East Timor as an independent state, it agrees with the Timorese independence movement (which is now a coalition that includes UDT, the conservative party that once opposed Fretilin in a brief civil war) on the question of the island's political status. They both, like the UN, see East Timor as an occupied, non-self-governing territory.

The Timorese independence forces want negotiations with Indonesia and have called for free elections, under UN sponsorship, to determine East Timor's future status. Indonesia has been talking with Portugal for years at the behest of the United Nations. But the discussions have not succeeded in prodding Indonesia to comply with the Security Council resolutions. Neither has Indonesia consulted with Portugal on the question of the Timor Gap. The discussions, instead, have focused on the issue of whether and how a delegation from Portugal would be allowed to visit East Timor. The two sides are said to have agreed on some terms, but no visit has yet been announced.

Indonesian Foreign Minister Ali Alatas has complained that he is "sick of people misrepresenting the situation. It [East Timor] is not paradise but neither is it a hellhole." He said last year that if too much criticism came from Portugal, Indonesia might cut off the talks: "You need two hands to clap ... if this goes on we will reach a point where we'll have to review our position."


Australia and Indonesia are, in the meantime, moving ahead quickly to exploit the Timor Gap oil. They have set up a Joint Authority, responsible to both governments, which is running the project in that part of the seabeds--known as Area A--which the two governments have agreed to administer jointly and from which the revenues will be divided 50-50. In the part claimed exclusively by Indonesia (Area C, the section closest to the shoreline of East Timor), Australia will get 10 percent of the revenues. In the part claimed exclusively by Australia (Area B, the section closest to the shoreline of Australia), Indonesia will get 16 percent.

Companies are now preparing to bid for the 14 drilling blocks which have been laid out in the largest sector, Area A. Stuart Cave, an Executive Director of the Joint Authority (each country appoints one; Cave is the Australian choice), says the bids are "something that we're all waiting for with great interest. I think we'll get many bids.... There is some interest from all the majors and we have sent information out to about 50 companies." Cave says there has been "interest from all over the world: Japan, the U.S., the UK, European companies and Australian companies."

Australia's Financial Review has reported that major Japanese firms, including Nippon Mining and Indonesia Oil, are preparing bids. Cave confirms that Japanese firms "have shown a lot of interest. The Japanese have an interest in secure supplies of oil, and just how great that interest is we'll know when the bids come back."

Several groups of companies--including EIS Aquitaine, Petroz-NL Western Mining, and the Woodside group, which includes BP, Shell and BHP--had spent a total of $50 million on exploration in the Timor Gap before the rights were frozen in 1979. The Joint Authority has allowed those groups to choose their preferred blocks, and, in the event that they do not turn out to be the highest bidder, they will have the right to match the highest bid. Other firms said to have shown an interest in the Gap include Chevron and Petrofina. An internal Elf Acquitaine study done in 1977, said that the Kelp, which is located in Area A, could hold "an extremely large discovery."

In 1979, the Australian Department of Foreign Affairs estimated the Gap's potential reserves at a billion barrels of oil. Other estimates range up to six billion, a figure that Nick Kyranis, a senior technical director at the Joint Authority, finds "plausible." "The question," he says, "is what sort of risk factor shall we put on it?" Kyranis says that "the source volume and the volume of potential hydrocarbon generation source is such that there's room for major fields in there if all the other ingredients come together properly."

Kyranis estimates that "the chance of a discovery in Area A are probably quite high, probably better than 50-50, but the chances of several discoveries are obviously reduced and the chances of major commercial discoveries are reduced farther. If you do get major commercial discoveries I think it would probably be in the world's top 25, but you've got to apply a risk factor to that."

According to Stuart Cave, "the worst case is there's maybe four to five years exploration and nothing's found. I think that's very unlikely because of what's happening all around." Cave points out that the Timor Gap "has oil and gas all around it, but the area tends to be a little fragmented, geologically." He says that an optimistic scenario would be "maybe two or three fields of the order of Chellis and Jabaru [two nearby fields] which are producing about 80 to 100 thousand barrels a day." Chellis and Jabaru between them account for about a fifth of Australia's oil production.

Cave says the oil industry's attitude toward the Timor Gap is one of "guarded optimism." In June 1990, Brian Loton, the head of BHP, was quoted as saying that "Exploration of the Timor Gap ... might be delayed until the late 1990s by a host of legal problems." But when asked about the impact of the Portuguese World Court suit, Cave says, "We believe the Portuguese haven't got a case. Our government will defend the case very vigorously, and we're extremely confident there's no basis for the claim."

Cave says he recently attended a meeting with senior oil executives who said that the case was not a problem, and added that a high official of Petroz had "said that he was not concerned in the least about the Portuguese case." He also says the case would have no effect on the pace of exploration. "The Portuguese briefs will be presented to the Court in November of this year, and we anticipate Australia will respond sometime after that. The reward of the blocks will probably occur toward the end of the year. We' reshooting for a December meeting of the Ministerial Council [the joint body which represents the Indonesian and Australian governments] with the possible commencement of activities in 1992, and of course after that it will take some time for companies to get mobilized."

Asked if there were any contingency plans in the event that the World Court issued an injunction, Cave says "No, no, not at all. Based on the advice of our Foreign Affairs Department, we are proceeding full steam ahead to get some work going in the area." Nick Kyranis says he could not foresee any circumstances that could bring the exploitation to a halt. "I can't see it happening," he says. "There's a treaty in existence here that has a directive in it to explore or exploit as quickly as possible, and the framework's already been set up. And unless somebody marches in and stops us, there's no reason for us to hold off exploration."

The Joint Authority's technical offices are located in Darwin, Australia, the home of many Timorese refugees. Asked if he had heard anything about the human rights situation in East Timor, Cave replied, "Oh, I just have no comment on that. That's a situation I just don't want to get involved in."


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