East Timor frets as Australia extends gas deal deadline

Agence France Presse November 28, 2002 5:04am

The East Timorese government said it was "anxious" about Australia's decision not to ratify a gas development treaty until February, warning more delays could jeopardise the entire project.

After initially setting a December 31 deadline to finalise the Timor Sea Treaty, Australian Foreign Minister Alexander Downer emerged from talks with East Timorese Prime Minister Mari Alkatiri this week saying it was unlikely to be ratified until February.

A spokeswoman for the East Timor government's Timor Sea Treaty office said Thursday development of the Bayu-Undan liquefied natural gas (LNG) field could not begin until the treaty was ratified.

She said the gas field's developer Phillips Petroleum had a supply agreement with clients in Japan that would expire in early March if it was not ratified.

"Obviously if it's not signed by then it has emormous ramifications," she said. "We're anxious for the treaty to be ratified sooner rather than later."

At stake is what Alkatiri has described as his country's passport from poverty following 24 years of Indonesian occupation that ended in 1999 -- the revenue from Bayu-Undan and a larger gas field called Greater Sunrise.

East Timor stands to earn an estimated 3.5 billion US dollars from Bayu-Undan over 20 years.

A treaty signed in May gave East Timor 90 percent of revenue from a 62,000 square-kilometre (23,900 square-mile) joint petroleum development zone that encompasses the Bayu-Undan field.

But the division of revenue from Sunrise, which straddles the development zone and Australian maritime territory, remains a sticking point preventing the treaty's ratification.

The Australian government will not ratify the treaty until the so-called issue is resolved, despite East Timor's requests for it to be handled separately.

East Timor has asked for a greater percentage of potential Sunrise revenues, but Australia has refused to budge, opting instead to withdraw from the jurisdiction of the International Court of Justice for the arbitration of maritime boundaries to forestall any East Timorese claim to the Sunrise field.

Talks are scheduled to resume in early December.

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