Slugcatcher asks Timor Leste's econo-puppeteers: what is the cost of a reality check?

Learner drivers were once taught this simple rule of the road: “The right of way is something to which you are entitled. But, it requires someone to give it to you, and if they don’t, then you haven’t got it.”

If Slugcatcher’s interpretation of recent events is correct then Mari Alkatiri, Prime Minister of East Timor, is struggling to graduate from L-Plates – and possibly condemning his country to becoming the perpetual holder of the title of “world’s poorest”.

Last week, Alkatiri and his advisers, fired off their latest salvo in the great debate over the Sunrise gasfield development, and added a fresh claim about East Timor being entitled to back payment of royalties.

The view from Dili is that it ought to be paid about $3 billion by the Australian Government and assorted Timor Sea oil producers – and that the Sunrise onshore processing facilities ought to be located in their country and not in Australia.

The core argument from Alkatiri is that Australia has been getting an unfair share of the proceeds from oil and gas developments in the Timor Sea as a result of an international seabed agreement signed with Indonesia, the former occupying power in East Timor.

In its most simplistic form, it is easy to sympathise with the views of Alkatiri. His country is poor, freshly liberated, and needs on-going help.

On the other hand, the seabed deal is legal, long-standing, Australia has done more than its fair share to help East Timor, and is offering a disproportionate share of royalties from the Sunrise and other developments – should the developments proceed.

As Slugcatcher noted here in early August, Alkatiri is in grave danger of over-selling his hand because a bunch of high-paid advisers think they can embarrass the Australian Government into giving away more of the Timor Sea prize – perhaps the lot.

This is a mistake of massive proportions for two very simple reasons: First, Alkatiri’s audience in Australia is not sympathetic (nor is it in Indonesia). Second, Sunrise is important to him, but it is just another potential gasfield development to Australia which is littered with undeveloped gasfields.

No one doubts that East Timor is poor and needs help. But, that view does not go as far as re-writing legal agreements, or turning international seabed law on its head.

For Alkatiri, and his impoverished countrymen, the next few weeks are critical. Gas is in high demand around the world. Sunrise is poised to be developed, and East Timor is on the cusp to stitching up a future income stream which will meet much of its budgetary needs for decades to come.

But, by pushing for unrealistic goals, especially the nonsense of locating the gas processing plant in East Timor, there is a very real chance that Woodside and the Australian Government will simply walk away.

The Australian Government will say “we tried”. The Indonesians will say “we told you so”. And, the rest of the world will go “tut tut”, now let’s focus on the bigger questions of global terrorism, and where is East Timor anyway?

Woodside will echo all of the above views, put its Sunrise plans back in the bottom drawer of the filing cabinet, and pull out the drawer marked Browse Basin which contains the Brecknock and Scott Reef gasfields, and about 20 trillion cubic feet of gas, totally inside Australian waters and offering customers a chance to participate in a project without the sovereign risk element being promoted by Alkatiri.

Slugcatcher’s advice to the advisers of the East Timorese Prime Minister, available free of charge, is ‘grab a reality check.” The world, led by Australia, has freed your country. Not everything is precisely how you would like it - does any country possess the cake and the ability to eat it (crumbfree) concurrently?

You are turning East Timor into just another dodgy little speck on the map which will never attract foreign investment because you’re just too hard to deal with, and you raise the spectre of asset appropriation and/or nationalisation at a time when the world craves certainty, reliability and consistency.

If Slugcatcher was a betting man, he reckons Woodside’s Don Voelte is awfully close to telling his staff to close the Sunrise file and to move on to deals which can be completed.