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.