Nigel Wilson – Maritime boundary negotiations between Australia and East Timor have been put on hold for 50 years under a deal to share the Timor Sea's petroleum riches that will deliver up to $25 billion cash to the fledgling democracy.

Details of the deal – which adds more than $11 billion to the previously calculated value of the revenue transfer to East Timor – were disclosed after a new treaty was signed in Sydney yesterday.

John Howard, who witnessed the signing with East Timor counterpart Mari Alkatiri, said it would provide "a very important addition to the revenue stream coming to a tiny independent country".

The revenue transfer is equivalent to about $24,000 for each man, woman and child currently living in East Timor – one of the poorest countries in the world, with 42per cent of the population living below the poverty line.

The deal is the culmination of long-running negotiations between Australia and East Timor on how to split the oil and gas resources between the two countries.

Australia will pay East Timor an agreed fee to cover 50 percent of royalties and all other taxes the government collects from companies that develop the oil and gas fields.

But to achieve the full $25 billion, the giant Greater Sunrise gas project in the Timor Sea, operated by Perth-based Woodside, will have to go ahead within 10 years.

Woodside yesterday gave no indication the $5 billion project, which has been stalled since December 2004, would proceed.

A spokesman congratulated the two governments in signing the agreement but reiterated Woodside's position that it needed the agreement to be ratified by the parliaments of both countries before considering whether to proceed with Sunrise.

Northern Territory Chief Minister Clare Martin used the signing to urge Woodside to reactivate Sunrise, which aims to develop the eight trillion cubic feet of gas in underground reserves about 450km north of Darwin.

Despite her previous support for the East Timorese getting a better revenue deal on Greater Sunrise, she would not back the concept of Sunrise gas being developed through facilities in East Timor.

Mr Alkatiri said East Timor was "fighting" to have the processing plant built in his country. But this option has been rejected by the Sunrise partners – Woodside, ConocoPhillips, Shell and Osaka Gas – as too difficult and too expensive.

Foreign Minister Alexander Downer, who signed the agreement with his East Timorese counterpart Jose Ramos Horta, said the new agreements were on top of the "already very generous sharing arrangements" within the so-called joint petroleum development area between the two companies. East Timor gets 90 per cent of revenue from production of petroleum resources in the area, which Mr Downer said were worth up to $15 billion.

He said a maritime commission would be established to "enable high-level dialogue on a range of issues" facing Australia and East Timor in the Timor Sea, including the management of security threats to offshore platforms and co-operation in managing fisheries resources.

But some East Timorese were still critical of the new agreement, with the director of the Darwin-based Timor Sea Office, Manuel de Lemos, saying Australia stood to "gain substantially from the development of the Timor Sea in general and from the downstream processing in Darwin". He said: "It is important to remember that Timor-Leste (East Timor) gave up more than $US2.5 billion ($3.3 billion) in revenue from the Buffalo, Laminaria and Corallina oil fields, which were claimed by East Timor."

Ian Melrose, the Perth businessman who spent $2 million on an advertising campaign attacking the Australian Government for being ungenerous to East Timor, welcomed the new agreement. Attending an East Timorese celebration in Melbourne last night, he said: "Everyone is happy. Nobody is a loser out of this deal."