Australia says the decision on a permanent seabed boundary with East Timor should be deferred for up to 100 years to allow oil and gas projects to go ahead. The timetable will be put to East Timor at boundary negotiations which will resume in Canberra in the second week of March. The third round of talks will attempt to put new life into a so-called "creative solution" and end the diplomatic war-of-words between Australia and East Timor.

Presenter/Interviewer: Graeme Dobell

Dobell: Australia is offering East Timor a choice – you can have the money out of the Timor Sea or you can have boundary line, but you can't have both.

Under the take-the-money formula, Australian officials say a permanent boundary in the Timor Sea should be deferred until after all oil and gas resources have been exploited. That would put off any final definition of sovereignty – drawing the permanent seabed line between Timor and Australia for up to 100 years.

If East Timor agrees to the so called creative solution, it'd open the way for the 50-billion dollar Greater Sunrise project, which has been stalled by the boundary dispute.

The third round of talks in Canberra are scheduled to run from the 7th to the 9th of March, but can be extended if there's progress.

The previous round of talks broke down in Dili in September because of what Australian officials call East Timor's ambit claims, and more pointedly what one senior Canberra diplomat calls an international lobbying campaign by East Timor based on misinformation.

The outline of Australia's "take the money" offer is being more openly discussed, to answer Timorese claims that Australia is a bully, trying to grab resources rightfully owned by the world's youngest nation.

The Australian version of the creative solution is an agreement that puts aside the issue of a permanent seabed boundary without prejudicing the legal position of either side; that gives full legal certainty to the companies wanting to drill for oil and gas in the Timor Sea; and imposes no onerous requirements, such as East Timor's demand that a gas pipeline from the seabed field should be built to Timor, not to Australia's Northern Territory.

Canberra says the pipeline demand can't be part of any agreement, because it's a commercial issue to be decided by companies, not by the two governments.

In return for such a "creative" deal, Australia says it'd agree to transfer extra revenue to East Timor, which would be in addition to the existing royalty formula.

If East Timor doesn't accept the cash-for-sovereignty deal, then Australia is promising lengthy negotiations over a permanent boundary, stretching out for a decade or more.

On the issue of ultimate sovereignty, the two countries are as far apart as the Timor Sea. Dili says a permanent boundary should be drawn at the mid point between Timor and Australia. Canberra, by contrast, says more weight should given to the reach of Australia's continental shelf, which runs much closer to East Timor than the median line. This argument says Australia and East Timor sit on different continental shelves, and that's decisive in defining ownership of the seabed.

One Canberra official says Australia isn't giving too much credence to some of East Timor's claims because, he says, they don't recognise the existence of Timor's neighbour, Indonesia. He says East Timor's ambit claim asks for ownership of virtually all the oil and gas resources in the Timor Sea, including 10-and-a-half thousand square kilometres of Indonesian seabed.

So that's the choice Canberra is offering Dili – put aside the issue of a border for 50 to 100 years to allow oil and gas projects to go ahead today. Or push on with the full negotiations over sovereignty, and expect a complicated legal wrangle that will stretch well into the next decade.