East Timor's parliament approved a draft bill Tuesday on maritime borders, paving the way for the ratification of the potentially lucrative Timor Sea oil and gas treaty, signed in May by Dili and Canberra during the new nation's independence celebrations.

Prime Minister Mari Alkatiri, Timor's main negotiator of the oil treaty, told parliament that the new legislation would define a continental shelf and establish an exclusive economic zone, extending for 200 nautical miles from the Timorese coast.

"This is a very important day in the history of East Timor. This legislation will establish Timor's claims to the largest possible sea borders, in accordance with international law", Alkatiri told the Dili parliament.

Alkatiri, who also heads the majority Fretilin party in parliament, said the new bill would confirm Dili's claim to not only oil and gas, but also fish resources. The draft legislation was approved by 77 of the 88-seat legislature, with one MP abstaining and ten being absent.

Timor's intention to claim its full maritime boundaries, instead of those previously defined for it by Australia and Indonesia, means some areas of the Timor Sea will be jointly claimed.

The new legislation was "normal" for a new country like East Timor, Alkatiri said in a press release, and was similar to existing laws in both Indonesia and Australia, he added.

"In area where there could be overlapping, we hope to begin calm and swift negotiations with the parties involved", said Alkatiri.

"East Timor is a small country, recovering after decades of occupation, and our neighbors are strong and rich. However, I believe that Indonesia and Australia will be fair in the negotiations", Alkatiri added in the communique.