East Timor border talks resume

East Timor border talks resume

Bloomberg, Sydney, Australia

Australia and East Timor resumed discussions on maritime boundaries that may lead to more oil and gas revenue going to the former Indonesian province, an Australian government spokesman said.

Talks between delegations from both countries are expected to continue in Canberra until Thursday, said Chris Kenny, spokesman for Australian Foreign Minister Alexander Downer.

Downer and East Timorese counterpart Jose Ramos-Horta said Aug. 11 they agreed the framework of an agreement on boundaries and revenue from the Timor Sea that may help East Timor ratify a treaty that has delayed Woodside Petroleum Ltd.'s US$3.7 billion Sunrise project. The deal is worth $3.5 billion in revenue for East Timor, the Australian newspaper reported last month.

"Both countries have managed to negotiate a framework for an agreement, but it's up to the officials to negotiate the detail," Kenny said. "That process occurs this week; we obviously hope progress is good."

East Timor has been delaying the ratification of the Sunrise treaty, saying the existing maritime boundary gives Australia too big a share of oil and gas revenue.

East Timor, or Timor-Leste, broke away from Indonesia, Southeast Asia's biggest oil producer, in May 2002 after a 24- year armed struggle. It started talks in April with Australia with the aim of extending its boundaries to a mid-point between the two countries, which would place all of ConocoPhillips's Bayu-Undan gas field, the Sunrise, Laminaria, Corallina and Buffalo fields under its jurisdiction.

As the boundaries stand, East Timor is forecast to get about $4 billion of revenue from the development of known oil and gas reserves, while a mid-point boundary would give it $12 billion, Prime Minister Mari Alkatiri said last month.

The East Timorese delegation in Canberra is led by Jose Teixeira, the secretary of state responsible for resources, said Julie McDonald, a spokeswoman at the Department of Foreign Affairs and Trade.

"The Australian government hopes that these talks will build on the substantial progress made by Downer and Ramos-Horta on Aug. 11," McDonald said. At that meeting, the ministers agreed to "pursue a creative approach" taking into account the importance of revenues for East Timor and Australia's priority of sovereignty over its boundaries, she said.

The first day of talks consisted of "good initial discussions," the Australian and East Timor delegations said in an e-mailed statement distributed by McDonald. "The delegations look forward to further productive discussions over the next few days," they said.

Royal Dutch/Shell Group, Europe's second-largest oil company, ConocoPhillips and Osaka Gas Co. also own stakes in Sunrise, which is operated by Woodside, Australia's second- largest oil and gas company.

Woodside Chief Executive Don Voelte has said the Sunrise treaty needs to be agreed by the end of the year to prevent the project stalling for as long as a decade.