Australia ready to concede ground on Timor oil treaty

Australia ready to concede ground on Timor oil treaty

CANBERRA (AP): Australia said Monday it is willing to make
significant concessions to reach an agreement with East Timor on
sharing royalties from the Timor Sea oil fields.

The petroleum and gas reserves in the Timor Sea between
Australia and East Timor were originally carved up under a treaty
Canberra negotiated with Indonesia in the 1980s and early 1990s.

Indonesia gave up its place in the treaty after East Timor
voted for independence in 1999.

The United Nations Transitional Authority in East Timor
(UNTAET) is negotiating a new treaty with Australia on behalf of
the fledgling nation.

Oil and natural gas are expected to develop into an important
source of income for cash-strapped East Timor along with coffee
exports and, in the future, tourism.

UNTAET and East Timorese leaders believe the original treaty,
which split royalties equally, was biased in favor of Australia.

The treaty was based on Australia's continental shelf, which
extends well into the Timor Sea area.

UNTAET maintains that under international law a line should be
drawn halfway between East Timor and Australia in carving up the
reserves. Some analysts believe this could give East Timor up to
90 percent of revenue.

Australia had said it would not budge from the earlier
division of revenue. But following the latest round of
negotiations in Melbourne last week, the government has signaled
it will give more ground.

"We've indicated that we are prepared to move well away from
the current 50-50 split in favor of East Timor," Industry
Minister Nick Minchin said Monday at an oil and gas conference in
Hobart.

Minchin said he hoped East Timor understood there was a need
for urgency in signing a treaty.

"There is a sense of urgency about this given the substantial
prospective investments and the billion dollar decisions that
need to be made very soon. I think the next couple of months are
critical," he said.

UNTAET's representative at the negotiations, Peter Galbraith,
indicated negotiations were not going well.

"I would like to be able to stand before you and declare the
Timor Sea is open for business, unfortunately at the moment I am
unable to do so and I cannot say when it will be open for
business," he said.

Galbraith said UNTAET was still aiming to divide sovereignty
over the fields on an equal basis.