Dili seen gaining 85% of Timor Gap oil

Dili seen gaining 85% of Timor Gap oil

SYDNEY (AFP): East Timor is likely to receive around 85 percent of the rich oil and gas reserves in the Timor Sea following a breakthrough in talks with Australia on a new treaty, government sources said Wednesday.

It is understood negotiators have also reached provisional agreement on other aspects of the treaty which would replace a now defunct pact between Australia and Indonesia which divided production revenues equally.

East Timor, until recently a captive Indonesian province, had no say in what happened to its oil and gas revenue, access to which has been one of the major priorities of the UN transitional authority set up to steer East Timor to independent democracy.

Backed by Australia's Labor opposition and minor parties, East Timor originally demanded a 90-10 split of the revenue, tipped to reach US$200 million a year within five years.

The government initially offered a 60-40 split, but agreed earlier this year to revise the offer.

A dispute between the newly independent former Indonesian province and Australia over royalties had led to suspension of exploration plans worth billions of dollars by major oil companies including Australia's Woodside Petroleum, Phillips Petroleum and Shell.

But following the negotiations in Brisbane last week, Australian officials say they are now optimistic a comprehensive agreement on legal arrangements and revenue will be possible within months.

A number of issues outstanding following the negotiations will be discussed in further talks later this month between Australian Foreign Minister Alexander Downer and East Timor's Economic Affairs Minister Mari Alkatiri.

"We would describe the most recent meeting we held in Brisbane with the East Timorese as constructive," a spokesman for Downer said Wednesday.

"There's still more work to be done and they are looking at resuming these talks later this month."

East Timorese businessman Leno Lopez, one of 20 delegates flown to Australia for a two-day briefing about gas projects planned for the disputed energy field, said the East Timorese wanted the treaty finalized as quickly as possible.

"We have to get on with life and get this thing done as quick as we can," he said.

"Really what people are interested in is getting this thing going because we've got huge unemployment -- people have got no money.

"If we drag this for too long, when will Timorese start to get their royalties? Once the UN take off, we've got no money."

The briefing is being hosted by Australia's Northern Territory government and Phillips Petroleum whose Bayu-Undan liquid natural gas project is the most directly affected by the stalemate.