Timor oil

Timor oil

East Timor has finally secured its pot of liquid gold. After protracted, sometimes bitter, negotiations with Australia over oil and gas in the Timor Sea, agreement on the disputed Greater Sunrise gas deposit confirms a resource-led future for East Timor.

With the Bayu-Undan oilfield already on line, and that money flowing, Australia's poor, vulnerable young neighbor has a real opportunity to build a viable economy and end aid dependency for good.

Conservative estimates suggest East Timor can count on $US15 billion in oil and gas royalties over about 40 years.

The sudden injection of large sums of easily won cash into any economy also inevitably erodes cultures of thrift. Incompetently or corruptly managed resource riches can make poor nations poorer. East Timor's transparent Petroleum Fund, however, is a prudent plan for the future.

The fund locks Timor Sea oil and gas revenue into sustainable, long-term international investments. It is not foolproof, and much hangs on whether returns from the fund can be translated into prosperity. It is, however, the best possible start. -- The Sydney Morning Herald