Timor in $13bn gas deal windfall

AUSTRALIA and East Timor yesterday signed off on a deal to share revenue from the Timor Sea's lucrative energy reserves.

That would result in a potential $13.2 billion windfall for the tiny nation.

The signing ceremony, witnessed by Prime Minister John Howard and his East Timorese counterpart Mari Alkatiri, was the culmination of long-running negotiations between the two nations on how to split the resource, worth up to $41 billion.

The deal saw the countries delay for 50 years a decision on a permanent maritime boundary in the Timor Sea.

It ensured a 50-50 royalty split from the large Greater Sunrise energy field.


East Timor, one of the world's poorest nations, stood to reap up to $13.2 billion when the Greater Sunrise project finally proceeded.

Foreign Affairs Minister Alexander Downer said East Timor would be $5.3 billion better off under the arrangement. Under a previous agreement, East Timor was entitled to 18 per cent of royalties compared with the 82 per cent flowing to Australia.

Dr Alkatiri said the agreement would provide a major boost to the tiny nation's revenues, while protecting its territorial sovereignty. "I am confident this is for the benefit of the people," he said.

Even with the certainty of the new pact, Australian energy giant Woodside Petroleum, operator of the Greater Sunrise project, gave no indication of when the development might go ahead.

Dr Alkatiri predicted production could be up to 10 years away. Woodside put the project on hold at the end of 2004 because of the uncertainty through the protracted negotiations between Australia and East Timor.

Company spokesman Roger Martin said there still were a few steps to go before the Greater Sunrise joint venture partners would make any decisions on how to proceed.

Mr Howard believed the deal was a fair and just outcome. "It means the very close relationship between our two countries can not only continue but become even closer," he said.

Tim Clarke, co-ordinator of the Timor Sea Justice Campaign, described the deal as a stop gap solution, saying nothing was settled on the maritime boundary issue.