Petrogal eyes oil business in East Timor

Petrogal eyes oil business in East Timor

LISBON (AP): East Timorese pro-independence leaders and Portuguese state oil company Petrogal said Friday they planned to hold talks on oil exploration rights in the Timor Gap, a strip of sea off East Timor which has been developed jointly by Australia and Indonesia under a 1989 treaty.

Mari Alkitiri, a vice-president of the National Council of East Timorese Resistance, said Petrogal has promised to train East Timorese oil engineers but denied a Portuguese newspaper report Friday that Petrogal already had agreed to take a 10 percent of oil production rights.

Alkitiri told Portuguese state radio RDP that a future East Timorese government would open talks on exploration rights with the Australian government.

The Timor Gap has proven oil and natural gas reserves which could play a key role in making devastated East Timor an economically viable nation after it voted last month to break from Indonesia. Since then, Indonesian army-backed militiamen opposed to independence for the former Portuguese colony have destroyed much of its infrastructure.

Under their treaty Australia and Indonesia have shared royalties from oil exploration in the Timor Gap. Jakarta said it will revoke the treaty after East Timor voted for independence.

Phillips Oil Co. Australia, a unit of Bartlesville, Okla.- based Phillips Petroleum, now pumps 33,000 barrels of oil daily in the region and has a 50.3 percent interest in a natural gas field under development. Other investors in the gas project include Oklahoma City-based Kerr McGee Corp., at 11.2 percent.

Some of Portugal's largest companies, including companies in the transport, telecommunications and energy sectors, have created a holding to coordinate major infrastructure investments in East Timor. Petrogal is still mulling whether to join the holding.

The oil and gas reserves could be used as collateral to help East Timor secure international loans to begin rebuilding programs.

East Timorese resistance leader Jose Alexandre "Xanana" Gusmao is due to hold talks next week in Washington with World Bank officials. The bank and the International Monetary Fund have expressed interest in lending to an independent East Timor.

The half-island territory also has strong growth potential in coffee and tourism.

Indonesia invaded East Timor in 1975, a few months after the departure of Portugal's colonial administration and annexed it the following year in a move not recognized by the United Nations.