East Timor offered large oil, gas slice

Downer wants to make a "generous offer" to East Timor

By CNN's Ian McMinn

SYDNEY, Australia (CNN) -- Australia is now offering East Timor up to 85 percent of petroleum and gas revenues from the Timor Sea.

This is not far short of the 90-10 breakdown East Timor is demanding in a new Timor Gap treaty and a long way from earlier reported offers no higher than a 60-40 breakdown.

"We wish to make a generous offer that is good for East Timor, accommodates our own interests and considerations arising out of future investments," an aide to Australia's Foreign Minister, Alexander Downer, told CNN.

Under the 1989 Timor Gap treaty Australia shared revenue with Indonesia on a 50-50 basis.

In the short term, production revenues are tipped to reach $70 million by 2004.

However an expanded Timor Gap treaty could include the Laminaria oil field and the greater Sunrise gas fields, which lie outside the former Zone of Co-operation boundaries.

According to analysts, further delays could also slow the development of the $2 billion Bayu-Undan gas and condensate project, and retard capital investment planned for the Timor Sea region by companies including Shell, Woodside, Santos and Phillips Petroleum.

Chance to 're-open' business

"I would like to stand before you and declare the Timor Sea is open for business. Unfortunately, at the moment, I am unable to do so," East Timor's Minister for Political Affairs, Peter Galbraith recently told delegates to a petroleum conference in Hobart, Australia.

According to government sources Galbraith might soon have his chance.

"There's to be another meeting with East Timor on May 2," said the Downer aide," with a view to having a new treaty in place as soon as possible."

Even if East Timor accepts its terms, the new treaty's implementation is to a large extent tied to East Timor's push for full independence later this year.

In August there is to be an election for delegates whose task will be to draw up a new constitution, which should come into effect by the end of 2001.

"It is our hope it is firmly in place long before then," the aide said.

Northern Territory Oil and Gas

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