Australia, East Timor finish talks on expected Timor Sea pact
Australia, East Timor finish talks on expected Timor Sea pact
Angela Macdonald-Smith, Bloomberg, Sydney
Australia and East Timor completed the latest, and possibly
last, round of talks between officials on the split of royalties
from oil and gas fields in the Timor Sea.
"Further substantial progress" was made during the talks,
which ended in Sydney today, Australia's Department of Foreign
Affairs and Trade said in an e-mail. The dispute over royalties
and sea boundaries caused Woodside Petroleum Ltd. to halt work
Dec. 31 on its proposed US$3.7 billion Sunrise gas project.
The two countries last month agreed on "key elements" of a
revenue-sharing pact that may provide East Timor with as much as
A$5 billion ($3.9 billion) of additional revenue, Australian
Foreign Minister Alexander Downer said on April 29. As part of
the deal, East Timor agreed to ratify an accord on the Sunrise
project and to defer talks on permanent sea borders, he said.
"There is unlikely to be a need for a further round of
negotiations," the department said. "There will now be further
consideration of the overall package at the political level in
East Timor."
East Timor, or Timor-Leste, broke away from Indonesia,
Southeast Asia's biggest oil producer, in May 2002 after a 24-
year armed struggle. It started talks in April 2004 with
Australia in a bid to extend its boundaries to a mid-point
between the two countries, which would place all of
ConocoPhillips's Bayu-Undan gas field, the Sunrise, Laminaria,
and Corallina fields customers under East Timor's jurisdiction.
Last year, East Timor declined to ratify a treaty on revenue-
sharing from the Sunrise project, saying the existing boundary
gives Australia too big a share of royalties.
The agreement between Australia and East Timor could result in
East Timor receiving between A$2 billion and A$5 billion
depending on oil and gas prices, in addition to its 90 percent
share of royalties from fields in an area jointly administered by
Australia and East Timor, Downer said April 29.
The months of negotiations between the two countries were
"little more than a waiting game" as Australia was able to stall
until the smaller country "buckled under financial strain,"
Stratfor, an Austin, Texas-based intelligence provider, said May
2.
"The Timorese, needing fast cash flow, were forced to accept
the Australians' offer in order to survive, regardless of their
position in the sea boundary dispute," Stratfor said.
Woodside and its partners in Sunrise, which include Royal
Dutch/Shell Group and ConocoPhillips, will wait for "legal and
fiscal certainty" before resuming work on the project, Roger
Martin, a spokesman for the Perth-based company, said May 2.
Osaka Gas Co. also owns a stake in the Sunrise field.