Brendan Pearson – East Timor's bounty from Timor Gap oil and gas revenues may hit $US1 ($1.95 billion) billion annually this decade, East Timor's interim Foreign Minister, Dr Jose Ramos Horta, said yesterday.
His comments came as Australian and UN officials continued talks in Dili on a new Timor Gap treaty which is likely to provide East Timor with 85 per cent of royalties from oil and gas production, plus returns from downstream processing.
Dr Ramos Horta also sought to calm the fears of key investors, including US-based Phillips Petroleum, who have expressed concern at delays in the treaty. Speaking in Sydney, he said the East Timorese were keen to create a climate of confidence in the region, noting that negotiations were back on track and predicting a framework agreement was likely to be signed by July.
"We cannot afford to be seen by investors as radicals or irresponsible," he said. Dr Ramos Horta said the importance of the strategic relationship with Australia meant East Timor would not push for 100 per cent of the bounty.
"If we go by the international law, the Law of the Sea, we will probably be entitled to 100 per cent of the revenues," he said. "But we just need to glance over the map to see how dependent we are on Australia for almost everything. Because next door is a neighbour [Indonesia] who cannot help much."
He said a review of oil company studies had found East Timor would garner revenues of at least $US100 million over the next 2-5 years. "Afterwards, [annual revenues will be] upwards to $US1 billion. It ranges anywhere from $100 million to $1 billion in [total revenues from] both oil and gas," he said.
These revenues will dwarf the current recurrent budget of $60 million. But Dr Ramos Horta said the East Timorese were acutely conscious of avoiding mistakes made by other small states which had squandered commodity windfalls. "During all the years of waiting, we observed and learned the tragic experiences of other oil-producing countries, or of single commodity producing countries in wasting their wealth in mega projects or through corruption."
The main area of uncertainty confronting the new state was regional stability, he said. "We have relative peace today in East Timor but it is a fragile one."