Subject: FT: East Timor says no energy deal with Australia yet

East Timor says no energy deal with Australia yet By Shawn Donnan in Jakarta and Lachlan Colquhon in Sydney Published: May 17 2005 11:18 | Last updated: May 17 2005 11:18

East Timor's prime minister, Mari Alkatiri, warned on Tuesday that key details remained unresolved in the tiny nation's negotiations with neighbouring Australia over how to split billions in oil and gas revenues.

The two countries last week made an apparent breakthrough by agreeing to set aside discussions over where the maritime boundary between the two countries should lie for 50-60 years. They also agreed to a revenue split that would give East Timor 90 per cent of revenues from the area in question.

But in an interview with the Financial Times on Tuesday, Mr Alkatiri cautioned that ”very important details” still needed to be worked out and that it would likely be months before any agreement.

“I do believe that we are close to a deal. But we do not have a deal yet,” he said. “We still have [to discuss] some details, some very important details that are going to guarantee our claims on maritime boundaries ­ and Australia's also ­ during the life of the project.”

Mr Alkatiri would not discuss the details in question. He said, however, that they would take “one more round of conversations, maybe two” to resolve.

A spokesman for Australia's Department of Foreign Affairs and Trade conceded on Tuesday that it was likely to be “many months” before draft agreements were finalised and/or ratified.

East Timor's leaders have said for years that they want to diversify their economy and avoid creating one dependent on oil revenues that may one day disappear.

But with the country's economy slow to attract investment or turn on growth almost six years after the bloody end of 25 years of Indonesian rule that remains a difficult proposition.

The prime minister said East Timor would establish a special fund July 1 to hold all resource revenues. It will be managed by the country's parliament and would guarantee benefits endure beyond “just this generation.”

East Timor, which on Friday will celebrate its third anniversary as an independent country, was also working to attract infrastructure investors and those willing to commit capital to other sectors such as agriculture, fisheries, and tourism.

The economy, which is forecast to grow just 2 per cent in 2005-2006, is failing to keep up with population growth of 3 per cent in rural areas and 4 per cent in urban areas, Alkatiri said.

For that reason, he said, “the biggest challenge now is we need a real policy on family planning.”

Such a debate in the staunchly Catholic country would likely bring Mr Alkatiri, a Muslim, into further conflict with influential church leaders. The Catholic church has backed recent protests against Mr Alkatiri's government that began over a government decision to end religious education.

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