Australia promises secret aid to seal Timor gas deal: Report

Australia promises secret aid to seal Timor gas deal: Report

Agence France-Presse, Sydney

Australia promised East Timor millions of dollars in a secret
aid deal that convinced the world's newest nation to give up
claims to a huge undersea gas field, a newspaper reported
Wednesday.

Under unpublicized terms of the deal reached last week on
sharing billions of dollars in revenues from gas resources under
the Timor Sea, Australia agreed to pay East Timor US$1 million
per year for at least five years beginning immediately, The
Australian reported.

Australia also agreed to pay its tiny neighbor an additional
$10 million a year once production from the Greater Sunrise gas
field begins around the end of the decade, it said.

The aid promise sealed a controversial agreement under which
East Timor agreed to Australia's terms for sharing revenues from
the Greater Sunrise field, which is believed to hold more than
$30 billion worth of gas.

The special payments were contained in a document signed last
Thursday after Foreign Minister Alexander Downer was forced to
travel to Dili to secure East Timor's signature on the agreement
for Greater Sunrise, The Australian reported.

East Timor and Australia had been locked in intense
negotiations for months over sharing revenues from gas resources
in a joint development area in the Timor Sea and from fields that
straddled the joint development area and Australian territory.

The two government's agreed last year on a Timor Sea Treaty
giving East Timor 90 percent of the revenues from the joint
development area, where one field, Bayu Undan, is ready for
development.

But Australia held up ratification of the treaty until East
Timor agreed to its terms for sharing revenues from the much
larger Greater Sunrise field, which mostly lies outside the joint
development area.

The dispute came to a head last week due to a March 11
deadline for development of the Bayu Undan field.

With the threat that developers would pull out of Bayu Undan
and deprive cash-strapped East Timor of an estimated three
billion dollars in revenues, Australia was able obtain its demand
for more than an 80 percent share of revenues from Greater
Sunrise.

East Timor had demanded a 50-50 share of Greater Sunrise
revenues.