Jerry Norton, Dili – An agreement critical to advancing development of the Timor Sea's biggest gas resource could go to East Timor's parliament in September or October, and would likely be approved, the country's prime minister said.

Oil and gas producers have said they are waiting for the deal to be ratified before committing to development of the Greater Sunrise area, estimated to hold 8 trillion cubic feet of gas and up to 300 million barrels of condensate.

"I am confident it will be approved," East Timor Prime Minister Jose Ramos-Horta told Reuters in an interview on Friday, but he added he wasn't sure whether the agreement would go to parliament, now in recess, in September or October.

About 20 percent of Greater Sunrise lies in a Joint Petroleum Production Area (JPDA) between Australia and East Timor and the rest in what Australia calls its exclusive jurisdiction.

Under the JPDA 90 percent of royalty revenues go to East Timor and 10 percent to Australia, while the new agreement would share remaining revenues 50-50, potentially delivering up to $14.5 billion to impoverished East Timor over 20 years.

Australia has been putting off its own ratification waiting for East Timor to act first.

Greater Sunrise operator Woodside Petroleum Ltd froze the $5 billion project in 2004 while waiting for Canberra and Dili to iron out their differences.

Another sticking point has been whether to build a liquefied natural gas processing plant for Greater Sunrise in East Timor and a pipeline to feed it the field's production, or to send it to a plant being built in northern Australia.

"The remaining issue to be resolved is the direction of the pipeline, where the pipeline goes, to Darwin or to Timor," said Ramos-Horta.

"We believe it makes more economic sense, commercial sense, that it comes to East Timor, but we don't deal with it in a dogmatic, Biblical manner," he said.

"If we are persuaded through an independent study... that it makes more sense to go to Australia, then (so) be it, but we would then want some downstream compensation because of the loss of additional revenues that we know would come to our side if the pipeline were to come to East Timor."

Ramos-Horta said he hoped the study could be finished by the end of the year.

In addition to Woodside, Greater Sunrise's stakeholders include ConocoPhillips, Royal Dutch/Shell and Japan's Osaka Gas Co. Ltd.. Woodside is 34 percent-owned by Shell.

Ramos-Horta also said he was receiving next week "a significant delegation from the Middle East, from the Gulf countries, from Kuwait, from India to negotiate with them serious investment in infrastructure," including, among various projects, an "oil refinery to refine oil and export to Australia, Indonesia and so on".

The prime minister said he had just given the green light to an East Timorese company to build new oil storage facilities in the country which in nine months would have a capacity of up to 10,000 tonnes, "which is far more than the current oil storage facility we have with far better price".

Indonesia's state-owned Pertamina supplies the existing facility, while the new one would deal with Malaysia's Petronas, Ramos-Horta added.