Australia promises E. Timor full benefits of Timor Gap oil treaty

Australia promises E. Timor full benefits of Timor Gap oil treaty

SYDNEY (AFP): East Timor will receive all the royalties that would have gone to Indonesia under its 1989 Timor Gap oil exploration treaty with Australia, the Australian government pledged Tuesday.

East Timorese leaders Monday cast doubt on the future of the treaty, declaring it to be an illegal agreement and saying they would not be a successor to Indonesia in such an arrangement.

But Foreign Minister Alexander Downer urged caution, saying the former Indonesian territory had far more to gain than Australia from the treaty, which had the potential in time to become "a nice little earner" for the East Timorese.

The treaty gave Indonesia and Australia oil and gas exploration and production rights in a 61,000 square kilometer (24,000 square mile) "zone of co-operation" in the oil-rich Timor Gap.

"The treaty is in everybody's interest, especially East Timor's, that there is stability in the treaty arrangements in order not to jeopardize the investments that are taking place at the moment in the Timor Gap," he told reporters here.

Asked if Indonesia's royalties would in future be available to East Timor, he replied: "Absolutely yes.

"The UN will in future get those royalties until the point where East Timor becomes fully independent," he said. "But I think East Timor could do well.

"For Australia the royalties that come from the Timor Gap are never going to be very significant in terms of our budget but for East Timor they have the potential to be a nice little earner."

Downer said the current arrangements were being transferred from Indonesia to the United Nations, which is currently the governing authority of East Timor during its transition to full independence.

When East Timor moves to full independence, the treaty partner will change from the UN to East Timor.

"I know that the main investors, Phillips Petroleum, which is an American company, are in contact with the East Timorese," Downer said.

"We have had fairly constant discussions with the East Timorese ourselves.

"To start to unravel the whole of the Timor Gap Treaty, which I don't think for a minute is going to happen, would in turn unravel all of the investment in the Timor Gap and that wouldn't be in anybody's interest, particularly East Timor's," he said.