Australia ready to seal oil treaty with East Timor

Australia ready to seal oil treaty with East Timor

Associated Press, Canberra

Australia and East Timor will sign a treaty next week to
divide oil and gas reserves under the Timor Sea, the government
said Friday.

"It is my intention to sign the treaty with the East Timorese
government," Prime Minister John Howard told Australian
Broadcasting Corp. radio.

In a statement, Foreign Minister Alexander Downer said the
treaty would not include agreement on how revenues from the
disputed Greater Sunrise oil field - believed to be the region's
biggest - would be divided.

Instead, a memorandum of understanding will be signed setting
up a process by which the negotiations over Greater Sunrise can
continue.

"The treaty and related documents will open the way for major
oil and gas development in the Timor Sea," Downer said.

Howard will sign the treaty and memorandum in East Timor on
May 20, the day that the former Indonesian territory will
celebrate its formal independence.

Australia negotiated the treaty agreement last year with
United Nations officials who have been administrating East Timor
since it voted to split from Indonesia in 1999. The accord will
replace a similar treaty Australia had with Indonesia when it
ruled East Timor.

The impoverished country is desperate for revenue to help
rebuild infrastructure destroyed by pro-Jakarta militias after
its people voted to secede.

Howard dismissed the suggestion that the treaty favored
Australia, saying it had been "extremely fair" in its
negotiations with the East Timorese.

The area between Australia and East Timor is rich in undersea
oil and gas reserves. Most is on the Australian side of their
maritime boundary, but about 30,000 square kilometers (12,000 sq.
miles) have been designated as a "joint development zone."

Royalties from the zone are to be split 90-10 in East Timor's
favor.

But the Greater Sunrise oil field, reputed to hold the largest
reserves of all the fields, straddles that zone, lying 80 percent
in Australian waters and 20 percent in the joint development
area.

The location has caused a dispute over unitization, the
process of determining how revenue from the project will flow to
each country as each geographical area of the field is developed.