Canberra – Australia and East Timor today signed off on a deal to share revenue from the Timor Sea's lucrative energy reserves, resulting in a potential $US10 billion windfall for the tiny nation.
Today's signing ceremony – witnessed by Prime Minister John Howard and his East Timorese counterpart Mari Alkatiri – is the culmination of long-running negotiations between the two nations on how to split the resource worth up to $A41 billion.
The deal sees the countries delay for 50 years a decision on a permanent maritime boundary in the Timor Sea and ensures a 50:50 royalty split from the sizeable Greater Sunrise energy field.
East Timor, one of the world's poorest nations, stands to reap up to $US10 billion when the Greater Sunrise project finally proceeds. Foreign Minister Alexander Downer said East Timor would be $US4 billion better off under the new arrangement.
Under a previous agreement, East Timor was entitled to 18 per cent of royalties compared to the 82 per cent flowing to Australia.
Dr Alkatiri said the landmark agreement would provide a major boost to the tiny nation's revenues, while protecting its territorial sovereignty. "I am confident this is for the benefit of the people," he said.
Even with the certainty of the new pact, Australian energy giant Woodside Petroleum, operator of the Greater Sunrise project, is giving no indication of when the development may go ahead. Dr Alkatiri predicts production could be up to 10 years away.
Woodside put the project on hold at the end of 2004 because the uncertainty due to the protracted negotiations between Australia and East Timor. Company spokesman Roger Martin said there were still a few steps to go before the Greater Sunrise joint venture partners would be making any decisions on how to proceed.
Prime Minister John Howard believes the deal is a fair and just outcome and will strengthen relations between the two countries. "It means that the very close relationship between our two countries can not only continue but become even closer," he said.
But Tim Clarke, co-ordinator of the Timor Sea Justice Campaign, described the deal as a stop gap, band-aid solution because nothing was settled on the important maritime boundary issue. "It simply postpones the real issues of sovereignty for half a century," he said.
Mr Clarke said East Timor clearly had more claim over the energy field than Australia. "(But Australia) has bullied the poorest country in Asia into a series of dodgy resource sharing deals, to take billions of dollars that simply do not belong to us," he said.
The new pact allows for the arrangements under a 2002 Timor Sea treaty, which gives East Timor 90 per cent of royalties from oil and gas developments in the Joint Petroleum Development Area, to stand.
Mr Downer said that resource could be worth as much as $US15 billion to East Timor.
East Timor will now continue pressing Woodside to consider locating processing facilities for the development in Dili rather than Darwin.
The two nations got over their impasse after East Timor agreed to take that condition out of the political pact.
Dr Alkatiri said that a pipeline to Dili and an onshore liquefied natural gas (LNG) plant were technically feasible and economically viable.
Woodside is giving little indication it plans to budge on its preference for a Darwin plant.