Veronica Brooks, Canberra – Australia's Foreign Minister Alexander Downer said Wednesday maritime boundary negotiations with East Timor will resume next week, marking the sixth meeting in a year as the two sides move closer to a deal.

Downer said the April 26-28 meeting in Dili will concentrate on East Timor's proposal outlined last month for a "creative solution" that would allow oil and gas projects in the Timor Sea to go ahead, pending a permanent boundary being settled.

In particular, agreement on the proposal would enable the US$5 billion Sunrise liquefied natural gas project to begin, while in the longer term providing significant infrastructure and industry development for East Timor.

But Downer said he is cautious about whether a resolution is near. "We've been very optimistic about these talks in times gone by and then the next round of talks haven't been so successful," he told reporters.

"So I think we'll be more cautious in our expressions of how we think the talks will go at this stage. We can just be hopeful that they will gradually lead to a resolution of the differences between Australia and East Timor," Downer said.

The last round of top-level diplomatic negotiations was held in Canberra in early March.

"Under East Timor's proposal, both countries would continue to work together to exploit the Timor Sea petroleum resources, giving East Timor 90% of the royalties from the Joint Petroleum Development Area," Downer said.

"Significant revenues are already flowing to East Timor, and based on recent oil prices East Timor will receive about US$14.5 billion in revenues over the next 20 years – an average of almost US$2 million per day," the minister said.

Impoverished East Timor's economic well-being rests on Dili's bid for a major redistribution of royalties from the vast oil and gas deposits that lie beneath the sea that divides the two countries.

Negotiations broke down acrimoniously in October last year, prompting oil and gas producer Woodside Petroleum Ltd. (WPL.AU) to shelve its Sunrise project.

The breakdown meant Woodside couldn't meet its end-2004 deadline for legal and commercial certainty that would allow it to capture a 2010 marketing "window" for LNG exports. Woodside has said it won't spend any more money to advance Sunrise and has reassigned staff to other projects.

Woodside owns 33.4% of Sunrise, regarded as the richest prize in the Timor Sea. Its partners are ConocoPhillips (COP) with 30%, Royal Dutch/Shell Group (RD) with 26.6% and Japan's Osaka Gas Co. (9532.TO) with 10%.

Australia and East Timor have agreed to an interim revenue-sharing deal covering a part of the Timor Sea that takes in the ConocoPhillips-operated Bayu Undan field.

This Joint Petroleum Development Area splits the government revenues 90%-10% in East Timor's favor.

But East Timor has so far refused to ratify a second revenue-sharing deal known as the International Unitization Agreement. Under this deal, 80% of Woodside's Sunrise gas field would fall within Australian waters and the remaining 20% in the JPDA.

If Dili's "creative solution" gets the green light, negotiations between Australia and its northern neighbor on a permanent boundary would be postponed for decades until the Sunrise resource was exhausted. And if the parties resort back to thrashing out a permanent maritime border, this process would take many years.

In terms of a permanent boundary, Dili wants a border in the middle of the 600 kilometers of ocean separating the two nations.

However, Canberra argues the boundary should be the edge of the continental shelf, which in some places is just 80 kilometers from East Timor's coastline. That border would put the bulk of natural resources in the Timor Sea under Australia's control.