Angela Macdonald-Smith – US oil giant ConocoPhillips has settled the biggest part of its long-running tax disputes with the Timor-Leste government, clearing the air for potential further investment in the region down the track.
A joint statement issued late Wednesday by the two parties didn't disclose the terms of the settlement, which they said was confidential.
The acrimonious disputes have been ongoing for several years, overhanging discussions over the fate of Woodside Petroleum's Sunrise gas venture, in which Conoco is a partner, and clouding prospects for further investment by the US player in Timor-Leste's petroleum resources.
The tax assessments related to the decommissioning of the Bayu-Undan gas field, the drilling of the Phoenix and Firebird wells and the "capacity reserve charge" issue have all now been settled, according to the statement.
However the parties were unable to reach a deal on the tax assessment of pipeline withholding tax related to the Bayu-Undan gas pipeline that runs to Darwin. That matter will be left with the Singapore International Arbitration Centre, they said.
The disagreement centred on the tax treatment of activities mostly based in the Joint Petroleum Development Area in the Timor Sea, an area of waters jointly administered by Timor-Leste and Australia.
The Timor-Leste government and Conoco said they are "pleased to have agreed to a path that respects Timor-Leste's right to tax and the rights of ConocoPhillips as a taxpayer," they said.
In addition the parties have agreed on a framework including dispute resolution procedures and penalties, and to work towards a uniform tax codes for Bayu-Undan operations to minimise future disputes.
"The Timorese Government is committed to continuously working with international companies to ensure that the people of Timor-Leste benefit from business activities in the region, and is pleased that ConocoPhillips recognises the needs and challenges of an emerging state," Timor-Leste minister of finance Santina Viegas Cardoso said in the statement.
ConocoPhillips Australia West president Chris Wilson said the US company "holds in high esteem its relationship with Timor-Leste and the many Timorese who benefit from its Bayu-Undan operations."
The two said the settlement "sends a positive signal to developing countries and the international business community and potential investors alike."