Sydnye – East Timor has finally reached agreement with US energy giant Phillips Petroleum on a plan to pipe gas to Australia that could ease the fledgling nation's poverty, its officials said Sunday.
Six months after it was shelved when negotiations broke down, the 1.5 billion US dollar deal was back on track, providing for construction of a pipeline from Phillips's Bayu-Undan gas field to the northern Australian port of Darwin.
It will create hundreds of jobs and infrastructure for the former Portuguese colony seized by Indonesia in 1975, and which won its independence in 1999 after years of bloody secessionist conflict.
Even with international assistance, it remains seriously impoverished, with an annual budget of only 63 million US dollars. The estimated benefit to East Timor from the full Bayu-Undan development is 2.5 billion to 3.0 billion US dollars over the life of the field.
East Timor's chief minister Mari Alkatiri said the interim government and the company had agreed on a tax and fiscal package to allow the gas phase of the Bayu-Undan development to proceed.
"Petroleum revenue from the Timor Sea, and from Bayu-Undan in particular, will go a long way towards alleviating poverty in East Timor and will open up other investment opportunities in the joint East Timor-Australia area of the Timor Sea," he said.
He said East Timor had worked very hard with Phillips to achieve a successful conclusion on various outstanding issues. "We look forward to a lasting partnership with them," he added.
Australian Foreign Minister Alexander Downer and Industry Minister Ian Macfarlane said the agreement was an important development and further talks would be held.
"We will need to review the progress made by East Timor and Phillips and consider the implications for Australia's interests under the Timor Sea Arrangement, signed in Dili on 5 July," the ministers said.
"We look forward to further constructive discussions with the companies and East Timor early in the new year on resolving the remaining technical matters required for implementation of the Timor Sea Arrangement, by the time of East Timor's independence."
Alkatiri said there would be a commitment to the development of Bayu-Undan as a total project, including offshore gas production facilities as soon as Phillips and other Bayu-Undan unit participants have finalised gas sales agreements. "As part of the package, the Bayu-Undan participants will also commit to the employment of East Timorese and to investment in infrastructure in East Timor, " he said.
A spokesman for the UN Transitional Administration in East Timor said the agreement demonstrated to the international community that East Timor would soon be financially as well as politically independent.
The pipeline proposal, shelved six months ago, promises to meet the growing energy demands of southeast Australia while creating a lucrative export industry in liquid natural gas (LNG) and a new industrial base for Darwin.
Phillips President Stephen Brand said Australia had to ratify the agreement before his company could finalise gas sales arrangements that would secure project development.