Timor-Leste and the Australia Treaty on Maritime Borders and Implications for the Belt and Road Initiative

Abstract

This chapter deals with the dispute resolution on the maritime borders of Timor-Leste. On March 6, 2018, a treaty was signed in New York between Australia and the Democratic Republic of Timor-Leste establishing their maritime boundaries in the Timor Sea. However, the two states could not come to an agreement on how to develop the Greater Sunrise gas fields and to build a Timorese plant; the negotiations are continuing. Bayu-Undan, the major producing field within the new Timorese maritime area, is expected to cease production around 2022.

The main question is Timor-Leste’s desire to build a Liquefied Natural Gas (LNG) plant on the southern coast of the island. At present, it seems to be the sine qua non condition for the Government of Timor-Leste and Xanana Gusmão, the main negotiator. Diversifying the economy of the new country is not working so well, and developing tourism will not make Timor-Leste as attractive as Bali, so the rich fields of Greater Sunrise will have to be the main economic resource for the Timorese people. The new country of the twenty-first century would receive 80 percent of the revenue if gas from the fields is piped to the existing ConocoPhillips-operated Darwin LNG processing terminal in northern Australia. Timor-Leste would receive 70 percent if the gas is piped to a not-yet-built industrial complex on its southern coast. This chapter also considers the Chinese Belt and Road Initiative, especially its processes for dispute resolution, and its potential to play a direct role in the Timor-Leste petroleum sector.