[The Australian government has begun four days of hearings into the Timor Sea Treaty it signed with East Timor on the day of that country's declaration of independence in May this year. The Treaty covers the Joint Petroleum Development Area in the Timor Sea from which East Timor will earn most of its income for the foreseeable future. The hearings coincide with an ongoing debate about whether a natural gas pipeline should be built on Australian or East Timorese soil.]

Presenter/Interviewer: Karon Snowdon

Speakers: John Imle, energy consultant, and former President of Unocal; Jonathan Morrow, Head of the Timor Sea Office in the Office the East Timor Prime Minister

Snowdon: East Timor needs the money that will flow from the Bayu Undan gas field in the Joint Development Area. Under the Treaty it gets 90 per cent of the tax and royalty revenues. Ten per cent goes to Australia.

So East Timor is officially happy with the deal, pointing out that the thorny issue of maritime boundaries and resource sharing of other fields are separate issues and can be dealt with at a later date.

But others say East Timor is being ripped off, that the country would benefit a whole lot more if – in particular – the processing of the gas was done in East Timor, creating jobs, infrastructure and boosting the general economy.

Phillips Petroleum is the operator of the Bayu Undan gas field and it has gas supply contracts locked in, so has decided to build the plant near Darwin in Australia's Northern Territory.

One who is convinced it should be in East Timor is John Imle, former – now retired President of the big gas company Unocal. He's an energy consultant for Petro Timor which lost its investments when Indonesia invaded East Timor in 1975 and now has legal proceedings underway in Australia for compensation.

Petro Timor commissioned a study which John Imle says proves Phillips wrong when one of its executives told a Senate hearing in Darwin in 1999: "for engineering reasons, it is just not possible to take the gas to the north".

John Imle says its misleading to claim, as Phillips does, a pipeline to East Timor would be too expensive and technically impossible.

Imle: Well, I can only conclude that they've been misled because the pipeline installation contractors I've talked to, and pipeline engineering firms I've talked to, tell me consistently that it is technically possible to lay pipelnes in the water depths required to get from the various fields to East Timor. And that it can be done for less money than to move the same quantity of natural gas from the same fields to Darwin. And frankly I don't believe that.

Snowdon: Water depth and pipe strength is one thing, there is a whole raft of considerations for a company to take on board when considering investments of this size. Presumably these companies are not foolish and they've done their own studies and they've drawn up commercial conclusions based on economic feasabilities and all the rest. So my question is, why do you maintain that they would not be making a commercial decision?

Imle: Well the commercial decision may have included consideration of political risk, and I think these statements about impossibility of laying pipelines for technical reasons were made at a time when there was great instability in East Timor.

Snowdon: You've said that your interest in this is to see East Timor get the best deal possible, but isn't this about Petro Timor furthering its interests in this area?

Imle: I don't know how these recommendations, even if they were adopted would affect Petro Timor and its lawsuit. I think Petro Timor is acting at least in part as friend of the nation, of East Timor, and that is certainly my interest. I've stumbled across the situation here were I think East Timor is being done an injustice.

Snowdon: But can I say that you were once head of a company that doesn't have the best record in the world when it comes to small nations and developing economies.

Imle: I would push back very hard on that, and I think you must be refering to Myanmar. I am proud of what Unocal did in Myanmar. I'm proud of my role in it and I'm very proud of what we've done there, I'll stand by that 100 per cent.

Snowdon: Energy Consultant John Imle referring to his former company, Unocal's controversial pipeline in Myanmar or Burma. He will be appearing before Australia's joint parliamentary committee on the Timor Sea Treaty in a few days time.

Phillips Petroleum did not return phone calls for this story. But East Timor agrees with the company's decision to pipe gas to Darwin and process it there.

Jonathan Morrow is the Head of the Timor Sea Office in the office of the Prime Minister of East Timor.

Morrow: Well, whatever debates might be going on elsewhere, that debate is not going on in the East Timor government. As far as were concerned, the issue of a pipeline to East Timor is a distraction from the main game which is petroleum revenues. The East Timor government, of course, will do whatever it can to encourage future investment in the pipeline to Timor and all the independant expert advice received by the East Timor government indicates strongly that East Timor's longterm petroleum revenues will be maximised when Bayu Undan gas goes to Japanese buyers from a Darwin-based LNG plant.