The treaty determines entitlement to Timor Sea oil and gas reserves, including in the Greater Sunrise basin

This article is more than 2 years old

This article is more than 2 years old

Australia and Timor-Leste have a permanent maritime border for the first time after the signing of a significant and unprecedented treaty in New York on Wednesday.

The treaty finally determines each nation’s entitlement and ownership of the rich oil and gas reserves in the Timor Sea, including the untapped Greater Sunrise basin, estimated to hold $53bn worth of gas reserves.

However, the countries could not come to an agreement on how to develop the field, and will continue negotiations.

Australia and Timor-Leste to sign deal on contentious gasfield Read more

On Tuesday it was revealed the lead negotiator and former president and prime minister of Timor-Leste, Xanana Gusmao, had accused Australia of colluding with oil companies during the negotiation process and pushing for it to be developed in Darwin.

The final agreement marks the maritime border around the median line between the two countries – a concept supported by international law and at odds with Australia’s long-running claim of entitlement over the continental shelf.

The treaty recognises the rights of both nations, and establishes a special regime for the joint development, exploitation and management of the Greater Sunrise gas fields.

Under the treaty the two countries agreed to share upstream revenue from Greater Sunrise, but failed to come to an arrangement on the split.

Australia has pushed for 80% of revenue to flow to the Timorese, but with the gas piped to Darwin for processing. Timor-Leste has offered to take 70% but in return for the gas being piped to Timor-Leste for processing instead.

Borders will also be adjusted in the event particular gas fields are depleted or Timor-Leste and Indonesia come to their own agreement on continental shelf borders.

The treaty was the result of the first-ever conciliation under the UN convention on the law of the sea, brought by Timor-Leste, angry at revelations Australian spies had allegedly bugged the offices of Timorese officials during previous negotiations.

The UN secretary general, Antonio Guterres, a former prime minister of Portugal who had campaigned for Timor-Leste’s independence, spoke at the event.

“It was with enormous joy that I was present the day East Timor became an independent country,” he said.

“To see this ceremony is like the complement of that day, and to be here today is an enormous privilege and fills my heart with joy. This ceremony demonstrates the strength of international law, and the effectiveness of resolving disputes through peaceful means.”

Guterres said he hoped the treaty would “inspire other states to consider conciliation as a viable alternative dispute settlement”.

“The agreement being signed today is a further contribution to establishing legal certainty in the world’s ocean, an essential condition for a stable relationship, peace and security,” he said.

Timorese minister Agio Pereira said his country was reluctant to be the test case in an unproven procedure.

“Nevertheless, we were assured by experts in international law that this was our one and only recourse given the circumstances of the disagreement between Timor-Leste and our close neighbour and friend.”

He said the treaty signed on Tuesday was “a good treaty”.

“It is equitable, forward-looking, delinieating a permanent maritime boundary in the Timor Sea, guided by the principle of achieving an equitable solution,” he said.

The signing represented “a new chapter in the friendship between our two countries”.

Australia’s foreign minister, Julie Bishop, said the conciliation required compromise on both sides, and the treaty reflected a fair outcome.

“Australia believes the international rules-based order is fundamental to our collective security and prosperity,” Bishop said.

“Our treaty reflects the value and importance of those rules and institutions, and the benefits for states in abiding by those rules. In particular, our treaty reflects the importance of the UN convention on the law of the sea. As a maritime trading nation, Australia will continue to be a staunch supporter of UNCLOS and its processes.”

Bishop said the treaty was an important step in the development of a “rich, shared resource”, the Greater Sunrise gas field, which was crucial to Timor-Leste’s future.

Bishop also addressed accusations from Gusmao that the conciliation committee had shown bias and used inferior technical expertise, putting forward a formal recommendation against convention, which favoured Australia.

Bishop noted each country recommended two members of the commission and all “played an objective, forthright and rigorously independent role”.

On Tuesday, José Ramos Horta, a former president and prime minister of Timor-Leste, told the Guardian the development of Greater Sunrise was “an absolute necessity for the future wellbeing of this country”.