East Timor says it's only weeks away from finalising a boundary deal with Australia to exploit the oil and gas reserves of the Greater Sunrise field in the Timor Sea. Foreign Minister, Jose Ramos Horta says the draft agreement is 90 percent finalised, and would be worth five billion dollars to East Timor over 20 years.

Presenter/Interviewer: Graeme Dobell

Speakers: East Timor's Foreign Minister, Dr Jose Ramos Horta

Horta: The agreement as it stands at the moment is very beneficial to Timor Leste, to East Timor, and obviously beneficial to Australia. However there is still one legal hiccup but I have agreed with Alexander Downer that we should give another chance to our technical people, legal-minded people to meet towards the end of the month so that they resolve the legal intricacies that has broken down delaying the signing of the agreement.

Dobell: What is the legal hiccup?

Horta: On the Timorese side we want to preserve the possibility of resorting to some mediation or arbitration or international court to resolve any dispute that might arise. If the two sides fail to resolve them bilaterally through negotiations we could have any sort of dispute within the area, such as fisheries, such as security matters, collision, environment or new discoveries that straddle two sides that are undefined, and then who is going to decide what belongs to whom.

Dobell: Australia of course has ruled out any resort to the International Court of Justice in resolving the border issues on the Timor Sea, what sort of mediation then would you want to put in place?

Horta: What would remain sacrosanct is once we have a disagreement neither side should touch on the maritime boundary. This is a matter of letter and the spirit of the agreement; it's a matter of good faith that once we agree on a moratorium the moratorium is thoroughly respected. However having said that it does not mean necessarily that there might not be a dispute on other areas, and if some dispute arises outside the maritime boundary itself we should be able to first between the two sides to agree to resolve them amicably without involvement of third party. But assuming we fail between the two sides then we should be able to invite a mediator, a third party or we should be able to go to a court to decide the dispute.

Dobell: How big a difference is there then on this dispute settlement mediation issue?

Horta: Well there are differences obviously and we have to understand also Australia's concern, Australia is worried that any such loophole might be exploited by the Timorese side to raise the issue of maritime boundary.

If we have a dispute out that not related to the maritime boundary, but we go to a court, the court might ask the question but where is the maritime boundary? So Australia has this difficulty that it does not want to enter into an agreement that later shows its weakness and the Timorese side will use it to raise the issue of maritime boundary.

Dobell: Is this really then an issue of good faith between East Timor and Australia? Is it a matter of political will in some sense?

Horta: Yes definitely, you put it right, I think the agreement in letter and the spirit is very clear, but then there is the issue of good faith, the issue of trust. Of course the Australian government of today trusts that the current leadership in East Timor that we'll act in good faith, that we would never through the backdoor betray their good faith and would never raise issue of maritime boundary. But the Australian government rightly says well, what's going to happen in five years from now, ten years from now? Which government will be there in East Timor? Well but we could say the same in regard to Australia. So the question is that the two sides have to realise how important the agreement is for us, how beneficial it is for East Timor and for Australia.

Dobell: How important is it?

Horta: For East Timor it's very important, I think we have made significant progress, if this agreement goes ahead and then the whole pipeline business goes ahead East Timor just from upstream would tend to benefit several billion dollars over and above the initial position taken by Australia.

Dobell: Will the deal be signed by the end of the year?

Horta: I should hope so, I remain very optimistic that by the end of the year we should be able to clinch the deal.

Dobell: And just in dollars and cents terms what do you think the deal, the 50-50 split and the moratorium, what will that mean for East Timor in dollars and cents?

Horta: At the current oil price, at say 50-dollars per barrel the estimated value of Greater Sunrise is 11-billion dollars, and that means something like five-billion for East Timor over a period of 20 years or so.