Jakarta – Indonesian Foreign Minister Ali Alatas on Wednesday assured investors they would not lose out if East Timor became independent and the Timor Gap oil agreement had to be renegotiated.

"If East Timor finally becomes independent, this matter would have to be renegotiated because the Timor Gap is just south of East Timor," Alatas told journalists at the state Palace.

"I am sure [a renegotiation] can be reached. I think it will not disadvantage investors, and I think we will be able to discuss the best way out," Alatas said.

Indonesia has floated the possibility of letting go of the troubled former Portuguese colony it annexed in 1976 if an autonomy proposal for East Timor is rejected by its people. The autonomy outline is being finalised in talks with Portugal and the United Nations.

President B.J. Habibie has said that by January 1, 2000, Indonesia should not be burdened anymore by the matter of a settlement of the East Timor problem.

Australian Prime Minister John Howard said on Sunday it was possible that the Timor Gap treaty, which covers the control of offshore oil and gas reserves, and to which Australia and Indonesia are the main parties, may need a review if East Timor becomes independent.

"Our own position is not dramatically altered by that but there could be a need for change in negotiations," he said.

In December 1989, Indonesia and Australia signed an agreement on the joint exploration of the Timor Gap where they have overlapping border claims.

The agremeent, that came into force in 1991, splits the 35,000 square kilometre sea bed, believed to be potentially rich in oil an gas, into three zones. Indonesia and Australia each control one zone while the third and largest is jointly administered with a 50-50 income split.

The contracts awarded so far, involving Mobil, BHP, Woodside, Shell, Phillips, Boral Energy, Marathon and Enterprise, have been for the jointly operated zone.