Ray Brindal Canberra – East Timor has been poorly dealt with by Australia and companies wanting to develop vast natural gas resources in the Timor Sea, John Imle, a former president and former vice president of US- based energy company Unocal Corp., said this week.

"I'm appalled at what Australia has done to East Timor on two counts," he told Dow Jones Newswires in an interview Tuesday, honing a message he will reiterate at a conference later in the week.

One count is the controversial issue of the yet-to-be-settled disputed maritime boundary between the two nations, he said. At stake are potentially huge royalties from energy production in the area. The other is a "total lack of any consideration" of East Timor's needs as a destination for the Timor Sea's vast natural gas resources and processing of the gas before it is exported, he said. "This is a huge injustice to East Timor," he said.

Imle is in Australia to address a conference Friday focusing on the Joint Petroleum Development Area, an area in the Timor Sea jointly administered by Australia and East Timor. He is speaking at the conference in his role as a consultant to PetroTimor Comphanhia de Petroleos SARL, a Portuguese-registered concern owned by Oceanic Exploration Co. of Denver. Portugal granted oil concessions to PetroTimor before Indonesia's 1975 invasion of East Timor. The company is now trying to secure its lost property rights through Australian courts, he said.

East Timor formally became an independent nation May 20, and immediately signed the Timor Sea Treaty with Australia. The treaty is the fundamental document setting out how the economic benefits of energy developments in the Joint Petroleum Development Area in the Timor Sea are shared between the two. The treaty, which hasn't yet been ratified, was established without the setting of maritime boundaries between the two nations.

East Timor didn't establish maritime boundaries with Australia or any other nation and it didn't inherit any boundaries that existed prior to May 20.

Imle criticized Australia for agreeing to negotiate the boundary issue, yet withdrawing in March from the International Court of Justice, a body that could arbitrate the boundary issue. East Timor wants the boundary at the midpoint between the two nations, but Australia wants the boundary at the edge of its continental shelf, which would put it considerably closer to East Timor.

If the boundary is set at the midpoint, East Timor stands to reap a considerably larger flow of royalties from current and planned oil and gas production in the area. But if the midpoint boundary is accepted, Australia could lose billions of dollars in potential revenue from royalties from the proposed Greater Sunrise project on the eastern edge of the Joint Petroleum Development Area.

The Greater Sunrise gas field falls 20.1% within the Joint Petroleum Development Area, while 79.9% falls in Australian territory. Imle would also like to see some proposed natural gas pipelines from the Bayu-Undan and Greater Sunrise projects haul gas to East Timor for processing and re-export there. Bayu-Undan is operated by Phillips Petroleum Co., while Greater Sunrise partners are Phillips, Royal Dutch/Shell Group, Woodside Petroleum Ltd and Osaka Gas Co. Ltd.

At this stage, the proposed pipelines from these projects will run a much further distance undersea to Darwin in northern Australia, based on assertions the 3,000-meter Timor Trench offshore East Timor's southeast coast is too deep for such a gas pipeline to cross. But Oceanic paid for studies that show a pipeline from Bayu-Undan to East Timor isn't only technically feasible, but also economically better than a pipeline to Darwin, Imle said.

The risk factors on such investments must have been much higher several years ago, when East Timor "looked like a very dicey place," he said. These risks would have stopped project financing, insurance and indeed, any projects from proceeding, he said. But conditions in East Timor have changed, he added. The new nation now is peaceful, broke, desperately in need of government revenue, jobs, education and foreign investment, he said. Proposed gas projects could mean billions of dollars of direct foreign investment flowing to either Darwin or East Timor, he said. "There's no question about who needs it more," he said.