Tom Noble, Dili – East Timor's President Xanana Gusmao wants Australia to be fairer in negotiations over disputed oil and gas reserves, saying the delays are profoundly affecting the new nation's economy and it was "a matter of life and death for the state we are building".

"To provide schools, health services and basic assistance to the most vulnerable in our society, and to develop the agriculture and tourism sector, we need money," he said. "Money which is, inevitably, expected from the oil and gas exploitation in the Timor Sea."

In October, talks to find a "creative solution" to the dispute collapsed. Eight days ago, Woodside Petroleum, the lead developer of the proposed multi-billion-dollar gas project Greater Sunrise, said it would put the project on hold unless a deal could be struck by December.

Mr Gusmao said he was concerned at Woodside's plans to defer development, which would cost East Timor desperately needed royalties. "Although a delay is not what we desire, we are nevertheless prepared to face the consequences or effects of any delays. We fought 24 long years for our independence. We know how to be patient and we can persevere," he said. It was essential that East Timor negotiate permanent sea boundaries with Australia, which he said would entitle East Timor to all the areas in dispute, including Greater Sunrise.

"However, the Australian Government has refused to talk about the permanent maritime boundary and insists only on temporary agreements. We are prepared to negotiate, but this does not mean we give up our claims for a permanent maritime boundary."

In October, Australian officials blamed East Timor for the collapse of a deal that would have allowed the Greater Sunrise project to proceed. Most royalties would have gone to Australia.

Australia had offered about $4 billion extra in return for East Timor agreeing not to challenge the seabed boundaries between the two countries. The deal split the revenues from the Greater Sunrise deal 50-50, instead of 80-20 in favour of Australia, as previously agreed.

A separate deal to share royalties in a disputed part of the Timor Sea favours Dili. But East Timor wants permanent sea boundaries drawn halfway between the two countries, which would give it control of most oil and gas projects and billions of dollars in royalties and benefits in the next few decades.

Mr Gusmao said Australia's claim to a 200-nautical-mile sea boundary was not valid when countries were less than 400 nautical miles apart. "We understand that Australia has its claims, although we do not agree with the legal basis for their claim," he said. "Any solution or agreement must take into consideration the principles of international law and must be fair." He believed the delays were caused by a lack of understanding and openness.