Woodside says Timor gas development threatened by border dispute

Woodside says Timor gas development threatened by border dispute

Agence France-Presse
Sydney

Energy giant Woodside warned on Tuesday it will scrap a multi-
billion dollar oil and gas development in the Timor Sea unless
East Timor ratifies a controversial border treaty with Australia.

East Timor Prime Minister Mari Alkatiri has accused Prime
Minister John Howard's government of bad faith towards its
impoverished neigbour in the long-running dispute over maritime
boundaries in the resource-rich Timor Sea.

Alkatiri says Dili is unlikely to ratify an interim deal,
called the International Unitization Agreement (IUA), because it
gives East Timor only 18 percent of revenues from the Greater
Sunrise oil field while handing Canberra 82 percent.

"I always considered the Howard Government as good partners
but suddenly I realized that when billions of dollars are
involved they became really bad partners," Alkatiri told ABC
television.

Alkatiri doubted his parliamentary colleges would ratify the
IUA, which was signed late last year.

"It doesn't make sense now ... to table the IUA (in)
parliament for ratification," he said.

A spokesman for Alkatiri said the prime minister still
intended to submit the IUA although he did not know when.

"The process of ratification would be made easier if Australia
ceased its unilateral exploitation of the disputed area and
entered into good-faith negotiations to secure a permanent
maritime boundary in the Timor Sea," the spokesman said.

Woodside Petroleum, the lead company in a joint venture
preparing to spend A$7 billion (US$5.32 billion) developing
Greater Sunrise, said the IUA was needed for the project to go
ahead.

"It provides us with the legal and fiscal certainty we need to
proceed," a Woodside spokesman said. "Without it the development
cannot proceed and will not go ahead."

Greater Sunrise is expected to generate at least A$10 billion
in all and East Timor regards it as a lifeline that can end the
nation's dependence on international aid.

Australia wants to keep the maritime border agreed with
Jakarta after Indonesia invaded East Timor in 1975, which would
give it the lion's share of the reserves.

But Dili argues that Jakarta only agreed to that deal in
exchange for Canberra's recognition of its illegal annexation of
East Timor and the border should lie at the mid-point between the
two countries, in line with standard international practice.

In March 2002, Australia withdrew from the International
Tribunal for the Law of the Sea before the dispute reached the
arbiter, in what Alkatiri described as "a hostile act".

The IUA attempts to find a temporary solution to the dispute,
allowing development to go ahead as Dili and Canberra attempt to
thrash out a final agreement.

East Timor has accused Australia of breaking the IUA by
issuing exploration licenses in the disputed area and referring
to it as its territory.

Talks on the hotly-contested maritime border are due to resume
in Dili next week, with East Timor pushing Canberra to agree on a
timetable for the dispute's resolution.

Dili fears Canberra will drag out the negotiations over years
or even decades so it benefits from the favorable interim IUA
arrangements and hands over seriously-depleted resource fields
when the border is finally settled.

Alkatiri said he would consider asking the U.S. government to
act as an independent arbiter in the dispute to ensure East Timor
received a fair deal.

"Only a third party can really help us to get together and
resolve the problems," he said.

Woodside said Alkatiri had not directly told the company his
government would not ratify the IUA and the joint venture
partners would act as if it were going ahead unless officially
informed otherwise.

The other joint venture partners are ConocoPhillips, Shell and
Osaka Gas.