Australia, E.Timor aim to divide resource-rich sea

Monday October 6, 9:08 PM EDT

By Michelle Nichols

CANBERRA, Oct 7 (Reuters) - Australia and the world's newest country, East Timor, will next month begin what are expected to be difficult and lengthy negotiations on a maritime boundary through the resource-rich waters separating them.

Billions of dollars worth of oil and gas royalties will be at stake in the negotiations, due to begin on November 10.

"We will get the process underway in November. It's going to be a long and complicated process and we just wouldn't start putting time frames on it," a spokesman for Australian Foreign Minister Alexander Downer said on Tuesday.

Both countries claim maritime boundaries that overlap.

East Timor claims a sea boundary 200 nautical miles from its coast, consistent with its entitlement under international law and the U.N. Convention on the Law of the Sea.

But Australia is also entitled to a boundary 200 nautical miles from its coast.

The neighbours agreed to a temporary revenue-sharing treaty in March, until a maritime boundary is drawn, that splits revenue from a shared 62,000 sq km (23,900 miles) region 90:10 in favour of East Timor.

The Timor Sea Treaty nullified a previous agreement that split the revenues equally between Australia and Indonesia.

East Timorese Prime Minister Mari Alkatiri said on Monday revenue from Timor Sea resources would give his country economic independence. Most of East Timor's population of about 800,000 now survive on less than $1 a day.

"Generous donor assistance has given us a head start, but it is revenues from our natural resources that will allow future generations of Timorese to stand on their own two feet," Alkatiri said in a statement.

East Timor, which gained independence in 2002 after a 1999 vote to break away from Indonesia, has promised to use royalties to help alleviate poverty, create jobs and improve education.

The Timor Sea holds the Greater Sunrise and Bayu-Undan gas fields and the Laminaria, Corallina, Elang/Kakatua/Kakatua North oil fields.

The Greater Sunrise venture, operated by Woodside Petroleum (<http://money.iwon.com/jsp/qt/full.jsp?time=0&symbol_search_text=WPL>WPL), aims to begin supplying liquefied natural gas (LNG) to Asian markets by 2009 by constructing an LNG production plant at sea. Other shareholders are Royal Dutch/Shell (<http://money.iwon.com/jsp/qt/full.jsp?time=0&symbol_search_text=RD >RD)(SHEL), ConocoPhillips (<http://money.iwon.com/jsp/qt/full.jsp?time=0&symbol_search_text=COP>COP) and Osaka Gas Co Ltd (9532).

Bayu-Undan is operated by ConocoPhillips and has a deal to supply three million tonnes of LNG annually for 17 years from 2006 to Tokyo Gas (9531) and Tokyo Electric Power Co (9501).

Other shareholders in the venture are Santos Ltd (<http://money.iwon.com/jsp/qt/full.jsp?time=0&symbol_search_text=STO>STO), Japanese energy group INPEX Corp, Eni (<http://money.iwon.com/jsp/qt/full.jsp?time=0&symbol_search_text=ENI>ENI) unit Agip, Tokyo Electric Power and Tokyo Gas Ltd.

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