Mark Dodd – Negotiations between Australia and East Timor to conclude a new agreement on revenue sharing from the oil- and gas-rich Timor Sea have run into last-minute problems, a senior East Timorese official said yesterday.

At the end of a donors' conference in Canberra, the East Timor cabinet member for finance, Dr Mari Alkatiri, said an Australian offer of an 85/15 per cent revenue split was unacceptable and the situation had "become complex".

He said the East Timor side was holding to its demand for a 90/10 split and would hold new talks in Australia next week. There had been hopes that a deal could be finalised as early as today. Dr Alkatiri said he remained hopeful a new Timor Gap agreement would be ready by July 15.

A senior Australian official said negotiations, which had been running smoothly, had faltered over technical issues not necessarily linked to revenue sharing. "It's part of the endgame; it's not just about a revenue split. There are other issues on how you put together this agreement. It is not necessarily to do with money."

Meanwhile, Washington has urged Australia and East Timor to reach a speedy conclusion to the tortuous negotiations. "We urge the rapid conclusion of an agreement between East Timor and Australia to allow the Timor Gap resources to be developed," a United States delegate said in a statement at the Canberra conference.

Foreign investors have warned that contracts worth tens of millions of dollars are in jeopardy unless an agreement is in place by mid-July. A spokesman for the Foreign Minister, Mr Downer, said the Government was optimistic that a framework agreement would be able to be reached in the next few weeks.