Also: East Timor's Horta calls for over 90 pct of Timor Gap royalties

Australia Financial Review Timor Gap could pay up to $1.9bn a year to Dili

May 31

Brendan Pearson

East Timor's bounty from Timor Gap oil and gas revenues may hit $US1 ($1.95 billion) billion annually this decade, East Timor's interim Foreign Minister, Dr Jose Ramos Horta, said yesterday.

His comments came as Australian and UN officials continued talks in Dili on a new Timor Gap treaty which is likely to provide East Timor with 85 per cent of royalties from oil and gas production, plus returns from downstream processing.

Dr Ramos Horta also sought to calm the fears of key investors, including US-based Phillips Petroleum, who have expressed concern at delays in the treaty. Speaking in Sydney, he said the East Timorese were keen to create a climate of confidence in the region, noting that negotiations were back on track and predicting a framework agreement was likely to be signed by July.

"We cannot afford to be seen by investors as radicals or irresponsible," he said. Dr Ramos Horta said the importance of the strategic relationship with Australia meant East Timor would not push for 100 per cent of the bounty.

"If we go by the international law, the Law of the Sea, we will probably be entitled to 100 per cent of the revenues," he said. "But we just need to glance over the map to see how dependent we are on Australia for almost everything. Because next door is a neighbour [Indonesia] who cannot help much."

He said a review of oil company studies had found East Timor would garner revenues of at least $US100 million over the next 2-5 years.

"Afterwards, [annual revenues will be] upwards to $US1 billion. It ranges anywhere from $100 million to $1 billion in [total revenues from] both oil and gas," he said.

These revenues will dwarf the current recurrent budget of $60 million. But Dr Ramos Horta said the East Timorese were acutely conscious of avoiding mistakes made by other small states which had squandered commodity windfalls.

"During all the years of waiting, we observed and learned the tragic experiences of other oil-producing countries, or of single commodity producing countries in wasting their wealth in mega projects or through corruption."

The main area of uncertainty confronting the new state was regional stability, he said. "We have relative peace today in East Timor but it is a fragile one."

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Australian Associated Press Wednesday, May 30, 2001

East Timor's Horta calls for over 90 pct of Timor Gap royalties

MELBOURNE - East Timor Foreign Minister Jose Ramos-Horta was tonight optimistic that his country would receive at least 85 per cent of royalties from oil and gas extraction under a new Timor Gap Treaty.

But he challenged the Australian government to match Labor's offer of 90 per cent.

Under the original 1989 treaty, royalties were split 50:50 between Australia and Indonesia.

Foreign Minister Alexander Downer last week said Australia and East Timor had resolved their major differences on the issue and were working towards a new treaty.

Mr Downer declined to give details of how royalties would be split, but said Australia was prepared to concede the lions share. Speaking in Melbourne tonight, Dr Ramos-Horta said the royalties were essential for East Timor's future economic development, and while negotiations were still underway, he was confident a deal was close.

"There is optimism on our side and in Canberra that we can reach at least a new interim arrangement that would enable the oil companies, particularly Phillips Petroleum, to invest the hundreds of millions of dollars needed to lay down the pipelines from the Timor Gap area to the Northern Territory," he said.

"Eighty-five per cent I hope is the minimum that the current government will offer," he said.

"(But) I hope that John Howard and Alexander Downer will want to do more than what Labor has offered.

"Kim Beazley and Laurie Brereton have said a Labor government will offer 90 per cent of the revenues to East Timor.

"So if I were John Howard and Alexander Downer, I would never allow Labor to be seen as more generous that I.

"So the minimum that the current government should do is to offer 91 per cent or 95 per cent. The Australian community will applaud that," Dr Ramos-Horta said.

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