Australia and East Timor strike oil, gas agreement
Australia and East Timor strike oil, gas agreement
SYDNEY (AFP): East Timor will receive a multi-billion-dollar cash injection after Australia conceded the fledgling state should receive 90 percent of royalties from oil and gas reserves in the Timor Sea.
Australian Foreign Minister Alexander Downer and Industry Minister Nick Minchin will travel to East Timor's capital Dili on Thursday to sign the agreement.
Australia previously shared royalties on an equal basis with Indonesia but was forced to renegotiate the agreement after East Timor won its independence in 1999.
The new deal represents a major boost for the finances of the impoverished new state as it gears up for its first post- independence elections next month.
The shattered East Timorese economy has been largely propped up by aid donors, notably Australia, former colonial power Portugal and the United Nations.
The foreign envoy of East Timor's interim administration, Nobel peace laureate Jose Ramos-Horta, said the "historic" agreement would generate A$400 million (US$208 million) over the next three years.
"Without this kind of money we would not be able to generate employment," he said.
"Obviously in the first few years of independence it's very important that there will be jobs to stabilize the situation."
As more projects come on line from 2004, the Australian government estimates that East Timor will receive "substantially more" than A$7 billion (US$3.64 billion) over the next two decades.
"It will be a way of giving some revenue to the new country, which is going to be a very poor country and will need a lot of assistance," Australian Prime Minister John Howard said.
Downer told the Australian Broadcasting Corporation the government "took the view that we wanted to be generous to East Timor because it's in our interests that East Timor does have a good and steady flow of revenue from the Timor Sea oil and gas reserve".
Australian and East Timorese officials, monitored by the United Nations, reached agreement late Tuesday after 12 months of protracted negotiations.
One of the commercial driving forces behind efforts to tap oil and natural gas reserves in the Timor Sea separating the two countries, US-based Phillips Petroleum, hailed the deal.
"It was a fundamental requirement -- we certainly welcome this agreement and this development," said senior Phillips Petroleum executive Jim Godlove.
"It is our hope this framework agreement will provide a secure legal and fiscal level that supports continued investment," he told AFP.
Phillips has interests in the Sunrise, Elang-Kakarua and Bayu Undan projects.
Australian government projections estimate the Bayu Undan and Sunrise projects will generate a combined total of 5.2 trillion cubic feet of natural gas and 721 million barrels of oil and liquid petroleum gas.
However, just 20 percent of the Greater Sunrise project is located in the area governed by the agreement, while neighboring operations are regarded as significantly smaller.
After 24 years of guerrilla warfare following Indonesia's 1975 invasion, East Timor's economy was devastated by pro-Indonesian militia violence in the wake of the 1999 independence referendum.