Australia warns $5b Timor Sea gas project may fail

Australia warns $5b Timor Sea gas project may fail

Associated Press, Canberra

Australia warned Thursday that a US$5 billion (euro 3.9 billion)
natural gas project in the Timor Sea could be scrapped after East
Timor rejected its latest proposal.

East Timor Prime Minister Mari Alkatiri said on Wednesday that
a third round of talks with Australia had ended without an accord
on the project in an area where the maritime boundary is in
dispute.

But Australia's chief negotiator, Department of Foreign
Affairs and Trade Deputy Secretary Doug Chester, warned that the
Greater Sunrise gas field development could be abandoned if no
agreement is reached by Christmas on sharing $30 billion in oil
and gas royalties .

"The ball's in East Timor's court," Chester told Australian
Broadcasting Corp. radio. "We've put forward a number of
suggestions for a creative solution; they've been rejected."

Chester said the two countries had been close to striking a
deal but the East Timorese changed their negotiating position
this week.

"We don't have any further ideas ourselves and it's now up to
East Timor to come forward with some ideas," Chester said.

Alkatiri said what the Australians had offered "did not come
even close to recognizing our sovereign rights in the disputed
areas."

"We were talking about Timor-Leste participation in the
development of the disputed resources; they were talking about
money," Alkatiri said in a statement, using East Timor's official
name. "We were too far apart to reach agreement."

Alkatiri, however, said he was still willing to participate in
negotiations.

The Sydney Morning Herald newspaper, citing unnamed Australian
sources, said the East Timorese were offered about 3 billion
Australian dollars ($2.2 billion) in additional tax revenue in
exchange for deferring discussions on settling a maritime
boundary for 100 years.

Impoverished East Timor wants a maritime border midway between
the two countries, which it argues would provide Dili with an
extra US$12 billion in total revenue.

Australia, however, wants the border it shared when Indonesia
occupied East Timor, which followed the Australian continental
shelf that at some points is only 150 kilometers from the East
Timorese coast.

That border puts the bulk of natural resources under
Australia's control.

In July, Woodside Petroleum warned its $5 billion Sunrise gas
project in the Timor Sea would stall if the countries failed to
resolve their dispute by the end of the year.

The latest talks had been aimed at achieving a solution to the
dispute over resources, without setting a permanent maritime
boundary, Alkatiri said.