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.