E. Timor, Australia sign oil, gas treaty

E. Timor, Australia sign oil, gas treaty

Agence France-Presse, Dili

Newly independent East Timor signed a treaty with Australia Monday on the division of Timor Sea oil and gas revenues, sealing an agreement that gives the impoverished nation a lifeline to economic self-sufficiency.

The Timor Sea Treaty awards East Timor 90 percent of the profits from oil and gas developments in a designated joint production area, guaranteeing Asia's poorest nation up to US$5 billion in earnings over the next 17 years.

Oil and gas revenues are the only way the new nation will be able to end its dependence on foreign aid.

Prime Minister Mari Alkatiri and his Australian counterpart John Howard signed the landmark treaty in the headquarters of the newly-inaugurated government, just hours after Alkatiri and the new cabinet were sworn in.

The treaty determines the petroleum carve-up until maritime boundaries between Australia, East Timor and Indonesia are determined.

Negotiations on international borders can only begin now that East Timor is officially a sovereign state.

The half-island's independence was proclaimed in a massive ceremony outside Dili overnight after United Nations Secretary General Kofi Annan handed over authority to East Timor -- a former Indonesian province and Portuguese colony.

"The treaty is not a maritime boundary delimitation and does not prejudice our maritime claims," Alkatiri said in a statement.

"It simply creates an interim framework for oil and gas investment in one part of the Timor Sea while negotiations on our maritime boundary claims proceed with neighboring countries."

Taxes from oil and gas projects are already trickling in, and are expected to cover most government expenditure by 2005-2006, according to budget projections -- giving the new country its first glimmer of self-sufficiency.

Months of negotiations over the treaty only ended on Thursday.

A provisional treaty was first agreed and signed by Australian and Timorese leaders last July.

The agreement "assures East Timor of vital revenue flows," Alkatiri said.

East Timor's new parliament, also inaugurated Monday, was due to adopt a maritime bill to state its claims as a basis for starting negotiations on all overlapping maritime boundary claims.

"These are major steps for East Timor, building blocks of our sovereignty and economic future," Alkatiri said.

"They create the framework for good relations with our neighbors and, in particular, with Australia."