Negotiations to determine seabed boundaries and ownership of the oil and gas reserves in the Timor Sea have been long-running between Australia and it's northern neighbours – previously Indonesia and now independent East Timor. But despite reports of agreement being near, it appears the issue of permanent maritime boundaries will again be deferred.
1972 Creating the Timor Gap
Australia and Indonesia sign an agreement setting seabed boundaries in the area of the Timor and Arafura Seas. In accordance with international law of the time, the boundary is set at the edge of Australia's continental shelf which is only 40 nautical miles from the coast of then Portuguese Timor.
However, because Portugal didn't participate in the negotiations or accept their outcome, a 130-nautical mile gap in the boundary was left in the waters off Portuguese Timor. This became known as the Timor Gap.
1975 East Timor invasion
Indonesia invades and annexes East Timor. It is later reported that prior to the invasion, then Australian ambassador to Indonesia, Richard Woolcott, sent a secret cable to the Department of Foreign Affairs in Canberra stating..."This Department [of Minerals and Energy] might well have an interest in closing the present gap in the agreed sea border and this could be much more readily negotiated with Indonesia..."
1979 Negotiations begin
Australia formally recognises Indonesia's claim over East Timor and negotiations on a maritime boundary in the area of the Timor Gap begin. Agreement is not reached.
1982 UNCLOS
The United Nations Convention on the Law of the Sea (UNCLOS) is finalised. (In recent times, both Australia and East Timor have used UNCLOS to defend their positions: East Timor argues UNCLOS sets sea boundaries at the midpoint between two opposite states while Australia uses UNCLOS to back-up the positioning of the boundary at the edge of Australia's continental shelf.)
1989 The Timor Gap Treaty
Unable to agree on permanent seabed boundaries between East Timor and Australia, the Jakarta and Hawke governments sign the Timor Gap Treaty allowing resources in the area to be exploited without prejudicing any future boundary negotiations between the two countries.
The Timor Gap Treaty established three Zones of Cooperation – Zone A, Zone B and Zone C. In Zones B and C – closest to Australia and East Timor respectively – revenue is to be shared 90/10 with the closest country receiving 90 per cent.
Zone A, located between Zones B and C, is to be jointly managed through a Joint Authority. Revenue in Zone A is to be divided 50/50 between Australia and Indonesia.
1991 Legal challenge
Portugal did not accept validity of the Timor Gap Treaty contesting its legality in the International Court of Justice (ICJ) in The Hague but the ICJ dismissed the case in 1995 because it involved a third country, Indonesia, which did not recognise the court's jurisdiction.
1999 Vote for independence
East Timor votes for independence and United Nations Transitional Authority in East Timor (UNTAET) is formed. UNTAET replaces Indonesia as party to the Timor Gap Treaty.
2000 Timor Gap Treaty declared illegal
UNTAET and the East Timor Transitional Administration (ETTA) declare the 1989 Timor Gap treaty illegal on the grounds that Indonesia was an illegal occupier of the territory.
UNTAET, Australia and East Timor begin negotiations for future arrangements in the Timor Gap.
2001 Joint Petroleum Development Area
Australia and UNTAET sign a Memorandum of Understanding of Timor Sea Arrangement (MOU) in anticipation of a new Timor Gap Treaty between Australia and East Timor when full independence occurs in May 2002.
The MOU could not be made binding for a future East Timorese government but was aimed at allowing continued exploitation in Zone A which under this MOU became known as the Joint Petroleum Development Area (JPDA).
2002 Australia withdraws from ICJ
Two months before East Timor gained independence, Australia withdrew from the section of the ICJ that deals with maritime boundary disputes in a move critics regarded as indicative of Australia's weak position under international law.
On the day East Timor gained full independence, 20 May 2002, the Timor Sea Treaty (TST) was signed between the governments of Australia and East Timor in Dili.
The TST contains the same provisions as the 2001 MOU and states that revenue from the JDPA will be distributed on the basis of 90 per cent to East Timor and 10 per cent to Australia.
The TST resolves that the Greater Sunrise Field – the largest deposit in the area – falls 20.1 per cent within the JDPA and 79.9 per cent within the Australian zone.
Like the 1989 Timor Gap Treaty, the TST does not resolve the issue of a permanent seabed boundary and allows both countries to jointly exploit the oil resources of the area without prejudicing their long term rights to negotiate a permanent boundary in the future.
The TST will remain in effect until a permanent boundary is negotiated or for 30 years, whichever is occurs first.
One of the first acts passed by the new East Timor Parliament was the Maritime Zones Act, which sets East Timor's sovereign maritime zones in a 200 nautical mile radius from the coastline. This claim overlaps with the claims of Australia in the Timor Sea.
2003 Greater Sunrise field
In March, the governments of East Timor and Australia sign an International Unitisation Agreement (IUA) to determine the taxation regime for the Greater Sunrise Field. (Because the Greater Sunrise deposit falls within both the JDPA and the Australian zone, the IUA is necessary to determine how to develop the deposit as one unit.)
The agreement has not yet been ratified by the East Timorese Parliament who say the deposit lies in an area of overlapping claims. Exploitation of the deposit cannot commence until a unitisation agreement is concluded.
2004 Boundary talks begin
Regular talks on maritime boundaries and disputed reserves between Australia and East Timor begin in April 2004. While East Timor requested monthly talks, Australia agreed to biannual meetings.
A second round of talks were held in September but no agreement was reached.
2005 Agreement nears on Greater Sunrise field
On conclusion of another round of talks in May, Australia's foreign minister, Alexander Downer, says the two countries are on the "threshold of an agreement" worth billions of dollars.
In July, East Timor's Foreign Minister Jose Ramos Horta says the two countries will sign a treaty within weeks. The deal will see East Timor receive 50 per cent of tax and royalty revenues from the entire Greater Sunrise Field in exchange for the issue of a permanent maritime boundary being shelved for at least 50 years.
"Money isn't such a big issue for us, but the boundaries are," Mr Downer said.