Talks on Timor Gap reserves collapse

The lucrative Greater Sunrise oil and gas project is in jeopardy after negotiations between Australia and East Timor broke down in acrimonious circumstances yesterday.

With no new talks planned for six months, the impasse means the Christmas deadline set by resources giant Woodside for the two nations to come to an agreement before it would proceed with development will not be met.

It also signals renewed hostility between Australia and East Timor, the country liberated in 1999 by Australian-led forces but struggling to develop a viable economy and frustrated by Australia's stance on the oil and gas reserves.

Government sources said East Timor was offered "billions" in additional tax revenue - believed to be about $3 billion - in exchange for deferring discussions for 100 years over the contentious sea boundary between the two nations.

But East Timor refused to budge on the offer, which would have given it almost half of the estimated $10 billion in oil royalties from the Greater Sunrise project. Under existing arrangements, it gets less than 20 per cent of revenues. Advertisement Advertisement

East Timor also wants the $3 billion gas processing plant and pipeline servicing Greater Sunrise to be built on its land, rather than at Darwin, Australia's preferred location. The spin-off benefits of the processing plant could amount to $22 billion over 30 years, East Timor argued.

"We were talking about Timor-Leste participation in the development of the disputed resources; they were talking about money," said East Timor's Prime Minister Mari Alkatiri. "We were too far apart to reach agreement."

A senior Australian official said yesterday that East Timor had "backtracked" on a tentative agreement made at talks last month in Darwin.

"We are disappointed no solution is possible," said a spokesman for the Foreign Minister, Alexander Downer.

East Timor believes the rich oil and gas deposits in the Timor Gap should lie almost wholly within their territory and have sought to challenge the boundaries negotiated by Australia and East Timor's former ruler, Indonesia, in the 1970s.

If the boundary was equidistant between the two countries, East Timor says it would get three times the revenue from the fields.

PERTH -(Dow Jones)- Australia's Woodside Petroleum Ltd. (WPL.AU) said Wednesday that officials from the company will meet with East Timor Prime Minister Mari Alkatiri this week.

"I understand that the prime minister is in Perth this week on other business, and he will meet with us," a Woodside spokesman told Dow Jones Newswires.

However, the spokesman was unable to confirm media speculation that the meeting will be about East Timor's push for a greater share of revenue from Woodside's proposed Sunrise project in the Timor Sea.

Woodside has warned that the Sunrise liquefied natural gas development will stall if a revenue sharing deal between East Timor and Australia is not settled by year end.

Maritime boundary negotiations between the two nations resumed in Dili this week.

Woodside Chief Executive Don Voelte is believed to be in the U.S. on business, while Chief Operating Officer Keith Spence is in Seoul to attend the opening of a North West Shelf gas marketing office in South Korea.

Support ETAN, make a secure financial contribution at etan.org/etan/donate.htm

Back to October menu
September
World Leaders Contact List

Main Postings Menu