Subject: Age: East Timor oil pact row stirs

The Age march 26, 2002

East Timor oil pact row stirs

By Jill Jolliffe Dili

An American-based oil company has told East Timorese politicians it will finance an international legal challenge to redraw their country's seabed boundaries with Australia.

Neil Blue, chairman of the Petrotimor company, told a meeting of opposition politicians: "Petrotimor is prepared to fund that litigation. We have engaged the services of people who are major experts on the seabed issue."

East Timor and Australia are due to sign a new treaty on Timor Sea oil resources on East Timor's Independence Day on May 20, but Mr Blue said Timorese leaders should reconsider.

The treaty will be based on seabed boundaries drawn up by Indonesia and Australia in 1989, the legality of which was unsuccessfully challenged by Portugal in the International Court of The Hague in 1994.

Sources said Chief Minister Mari Alkatiri last week asked the Australian Government to sign the agreement earlier.

A victory by presidential candidate Xanana Gusmao in elections on April 14 could lead to a backlash against Mr Alkatiri's government and a call for early parliamentary elections.

The politicians said their invitations to the seminar had been distributed through Mr Gusmao's office.

Geoffrey McKee, an Australian oil engineer, told the meeting that East Timor could be declared an exclusive economic zone after independence, with its maritime boundaries covering 100 per cent of existing Timor Sea gas and oil investments, including a 10 per cent share claimed by Australia.

The proposed new boundaries drawn up by Petrotimor legal experts would also involve a takeover of the entire Greater Sunrise field, now 80 per cent outside Timor's boundaries, and the Laminaria field, which is entirely outside.

Mr McKee said East Timor would gain an extra $US38.9 billion ($A73.4 billion) between now and 2030 if it succeeded in this challenge.

Petrotimor is a subsidiary of the Denver-based Oceanic Exploration Company, which was granted an exclusive 1974 concession to develop the Timor Sea area by the former Portuguese Government. It is challenging Australian Government claims to the area.

Its executives flew into Dili with international experts late last week and invited East Timorese parliamentarians to attend two seminars. After a visit by Petrotimor last year, UN administrator Sergio Vieira de Mello issued a memo forbidding UN employees to have contact with its staff.

Mr Blue said that his company would take over the 10 per cent Australian share in the maritime investments if its bid was successful.

His lawyer, Ron Nathans, said the proposed international litigation could cost "between $US3 million to $US5 million" over several years. He said a Federal Court hearing against the Commonwealth Government, the Ohio-based Phillips Petroleum Company and the Timor Gap Joint Authority was due to begin in mid-May.

The court action focuses on Section 31 of the Constitution, which states that the Commonwealth cannot "acquire property other than by just means".

Politicians at the seminar included leaders of several opposition parties, who said they now felt UN administrators had deceived them.

A UN spokeswoman who has worked with Mr Alkatiri said the Petrotimor stand was not neutral. She rejected Petrotimor claims that they could renegotiate borders without disturbing current investments.

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