Foreign Minister Alexander Downer said he was cautiously positive about reaching a deal with East Timor on how to share lucrative energy reserves beneath the Timor Sea.

Australia and East Timor have so far failed to reach agreement on how best to divide the estimated $A41 billion worth of oil and gas deposits lying beneath the sea between Australia and East Timor.

Talks last year broke down when East Timor accused Australia of making an ultimatum on the boundary terms. Mr Downer told reporters the discussions were to resume next month.

"We are moving forwards towards constructive discussions with the East Timorese in March when our next meeting is scheduled to take place," he said. "From my contacts with the East Timorese ... I am cautiously positive about how those talks will go forward. These are difficult issues, we just take them forward piece by piece."

German Foreign Minister Joschka Fischer raised the issue with Mr Downer during a bilateral meeting at the request of East Timorese foreign minister Jose Ramos-Horta. Mr Ramos-Horta asked Mr Fischer to take up the issue during his meeting with Mr Downer and Prime Minister John Howard.

Mr Fischer said he was confident the issue would be resolved amicably by the two nations. "These pending issues should be settled between two friendly nations," he said.