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Wednesday, 24 March 2004
Page: 21789

Senator ABETZ (Special Minister of State) (12:20 PM) —I thank honourable senators for their contribution to these important bills, the Greater Sunrise Unitisation Agreement Implementation Bill 2004 and the Customs Tariff Amendment (Greater Sunrise) Bill 2004. I welcome the comments from the opposition. I note the opposition's support for the legislation, albeit that, in the other place, the member for Lingiari made some inappropriate comments, I would suggest, in relation to his anti-business stance. But we will let that go through to the keeper. I simply say that, if he wants to be shadow resources spokesman, the way to develop resources within this country and within our economic jurisdiction is to have a good relationship with those companies and enterprises that seek to develop them.

These bills implement an agreement between Australia and East Timor to develop and commercialise the Sunrise and Troubadour petroleum fields in the Timor Sea as a single unit. These fields, known as the Greater Sunrise petroleum resource, straddle the border between the Joint Petroleum Development Area established by the Timor Sea Treaty and an area of Australian jurisdiction. Putting in place the legislative framework for the unit development of Greater Sunrise will contribute significantly to investor certainty—a necessary precondition for the development of the resource.

Development of Greater Sunrise will provide substantial benefits to both Australia and East Timor. From development will flow investment, exports, employment and revenue. Development can also be expected to enhance the Timor Sea as a destination for exploration activity, to the benefit of both nations, particularly East Timor. I am particularly pleased to note that the economic development of the Northern Territory will be greatly assisted by the development of the Greater Sunrise project. Senator Nigel Scullion from the Northern Territory has always championed the interests of the Northern Territory and this project, because of the benefits that will flow not only to the people of East Timor but to the Territory itself.

This year sees the first phase of petroleum production from the Bayu-Undan field in the Joint Petroleum Development Area. Further development of that project, which includes construction of a liquefied natural gas plant near Darwin, together with Greater Sunrise, will consolidate Darwin's position as a major oil and gas centre. I know that prospect excites not only Senator Nigel Scullion but also David Tollner, the member for Solomon. This government has made economic development in the Territory a high priority, as demonstrated by its support for the Alice Springs to Darwin railway.

The credentials of Australia and East Timor to act in cooperation were established with the ratification of the Timor Sea Treaty, which governs the development of the resources of the Joint Petroleum Development Area. The Greater Sunrise unitisation agreement being implemented by this bill consolidates these credentials. Maritime boundary discussions are in progress between Australia and East Timor, but nothing in the Greater Sunrise unitisation agreement or in this implementation bill allows either nation to use the agreement to support its boundary claims. These are separate issues. The Australian government is pleased to honour its agreement with East Timor by making legislative provision for its implementation. The government looks forward to ratifying the agreement when East Timor's implementation measures are also in place. The bill to implement the unitisation of the Greater Sunrise resource brings closer the day when Australia and East Timor can announce the expected commencement of petroleum production from Greater Sunrise.

I now seek to join issue with some of the matters raised by honourable senators during the debate. There has been some suggestion that there has not been the degree of consultation or meetings that would have been desirable. I indicate to the Senate that since the signing of the unitisation agreement by both countries on 6 March 2003, approximately 12 months ago, the Australian government has been in dialogue with the government of East Timor with regard to the implementation of the unitisation agreement and the Timor Sea Treaty, including those with the Australian Embassy in Dili. Since that time the records of the Department of Industry, Tourism and Resources show that there has been regular contact with East Timorese officials on a range of matters relating to petroleum activities in the Timor Sea, including Sunrise unitisation. Since that date there have been at least 10 meetings. These have been held in Dili, Darwin and Canberra, and there have been telephone conferences. In addition, there have been numerous email and telephone contacts. The Joint Standing Committee on Treaties processes on the unitisation agreement were commenced in May 2003 and hearings were held in Canberra on 23 June 2003. The treaties committee reported on 19 August 2003.

I turn to the issue of East Timor's maritime boundary claims. Australia does not accept East Timor's claims to areas to the east and west of the Joint Petroleum Development Area, which include the Laminaria and Corallina oilfields to the west and part of Greater Sunrise to the east. It is the government's view that these deposits are within areas of the continental shelf over which Australia has sole sovereign rights. Nevertheless, we are committed to negotiating a permanent maritime boundary between Australia and East Timor. It is an important matter and precedent indicates that such a process can take some considerable time. Nevertheless, following scoping talks with East Timor on 12 November 2003, some four months ago, it was established that formal negotiating rounds would be held twice yearly starting in April 2004—that is, next month. It is nothing out of the ordinary for maritime boundary negotiations to occur in half-yearly time frames; given the complexity of the issues as outlined in the committee report, it would be unrealistic to expect otherwise.

I turn to the issue of East Timor's claims to revenues from petroleum activities outside the Joint Petroleum Development Area. We are aware of East Timor's claims to revenues from petroleum fields lying to the west of the Joint Petroleum Development Area. However, the government does not accept that East Timor has jurisdiction over any of the deposits in the claim area and rejects any inference that petroleum companies—or for that matter, as Senator Brown claims, the Australian government—are operating illegally. The suggestion has been made that the Greater Sunrise revenue should be placed in a trust account. The unitisation agreement signed by both countries provides an agreed method for allocating the revenues and we are seeking to simply implement the agreement.

Then there is the issue of the legal basis of East Timor's claims. In Australia's view, international law does not require a state to cease petroleum operations in an area simply because another state subsequently makes an overlapping ambit claim to sovereign rights over that area. The issue of legal action being taken by Oceanic Exploration has been raised. The government stands by the actions Australia has taken with respect to the exploration and development of the resources of the Timor Sea and refutes any allegation of corrupt practices on its part. Any claims by Oceanic against Australia will be strenuously defended.

The issue of Woodside's local industry participation plan has been raised. The government welcomes Woodside's commitment to encouraging participation by both Australian and Timor Leste industry in the development of the Greater Sunrise resource. The preparation of a local industry participation plan similar to that required under the government's new enhanced project by-law scheme will increase the benefits that flow from the project to both Timor Leste and Australia. But the government could not force the preparation of such a plan because Timor Leste insisted that there be duty-free entry of petroleum production related goods into the Greater Sunrise area.

I have already referred to the issue of consultation, but I amplify that by noting that Senator Brandis, Chairman of the Economics Legislation Committee, which looked into this bill, noted in his report that the bill was referred to the committee on 10 March. The committee received submissions from four non-government organisations, four private individuals and Woodside. He emphasised that all these were considered by the committee, notwithstanding that they did not all appear before the committee at the hearing. He stated that this response demonstrated that the time frame did not prevent interested bodies or individuals from making their views known. Additionally, an invitation was made to the Timor Leste embassy in Canberra, advising them of the hearing and inviting them to participate.

Finally, I turn to the International Court of Justice issues. The government's position is that maritime boundaries are best settled by negotiation, not by reference to third party dispute settlement. Indeed, domestically, more and more we are seeing a trend away from litigation—quite properly—and toward trying to have negotiated outcomes and results. I would have thought that that being done on an international level would be welcomed by most Australians. Consistent with this, the government has placed a condition on its acceptance of compulsory jurisdiction under the so-called optional clause of the International Court of Justice. It has also entered a reservation in respect of the dispute resolution procedures under UNCLOS. This is consistent with international law. I thank honourable senators for their contributions to the second reading debate and I commend the bill to the Senate.

Question put:

That the amendment (Senator Stott Despoja's) be agreed to.