East Timor has taken exception to comments by Prime Minister Julia Gillard on the development of a gas field in the Timor Sea.

The development of the Greater Sunrise field has stalled because of a dispute between East Timor and Woodside. Yesterday Ms Gillard said Woodside's decisions should be in the best interests of its shareholders.

But East Timor's secretary of state for natural resources, Alfredo Pires, says treaties say Australia and East Timor must jointly choose what is in the best interests of people in both countries.

"In regards to that I find this very disappointing," he said. "We were expecting a new paradigm of the discussions."

The East Timorese government says Australia is a close friend but the comments do not lift its confidence in the negotiations. It says Labor's plan for a refugee processing centre in East Timor is an unrelated matter.