Dow Jones Newswires April 4, 2001

Australia, East Timor Resume Talks On Pete Royalty Pact

CANBERRA -- Australia and East Timor resumed talks this week over a new treaty covering the economic benefits from oil and gas production in the Timor Sea, a spokesman for Australia's Foreign Minister Alexander Downer said Thursday.

But agreement still hasn't been reached over the central issue in the talks: the split of royalty payments from energy production in a 75,000 square kilometer area known as the Timor Gap between the two nations, the spokesman said.

The latest round of talks being held in Melbourne, follow the first formal round in October and various informal discussions before and since.

"There are a number of key issues still to be discussed between the parties, the exact detail of those remains confidential, but certainly the split of revenue is one of those topics," Downer's spokesman said.

"We have made an offer in the negotiations that's more generous to East Timor than has been reported in the media," but this hasn't been finalized, he said.

Media reports earlier this year said Australia offered to give 60% of royalties to East Timor, which wanted 90% of royalties.

Much of the current and future energy production in the area will be sourced from the East Timor side of the midway point between the two nations.

Australia hasn't disclosed its position on where the seabed border should be set. East Timor wants the border set midway between the two nations.

The latest talks are being held Wednesday through Friday between officials from Australia, the United Nations Transitional Administration for East Timor and East Timorese representatives.

Sharing the benefits of energy production in the Timor Sea was originally covered by the 1989 Timor Gap Treaty between Australia and Indonesia.

But this lapsed when Indonesia formally withdrew after East Timor's August 1999 vote for independence from Indonesia.

Its terms were continued under a memorandum of understanding between Australia and UNTAET, which oversees East Timor's transition to full independence.

Downer's spokesman said the government wants to finalize a replacement agreement by the time East Timor gains full independence late this year.

Australia goes into the talks with a "positive approach as we want a replacement agreement that is fair and equitable to all parties," the spokesman said.

"It's fair to say they're making progress...there are obviously issues that still need to be resolved," he said.

Royalty payments from energy production in the Timor Sea have been relatively minor to this point.

But they are likely to lift sharply from about 2004 when the Bayu-Undan natural gas and liquids project in the Timor Sea is scheduled to begin production.

This likely will be the first of a number of major developments in the area.

These funds will have a much greater impact on the finances of the fledgling nation of East Timor than on Australia.

But whatever is agreed about the ultimate split of royalties, East Timor won't be the site of any land-based energy-related infrastructure such as a planned 4.8 million metric tons a year liquified natural gas plant, which will be based in the northern Australian city of Darwin.

-By Ray Brindal, Dow Jones Newswires; 612-6208-0902; ray.brindal@dowjones.com

April Menu
March 
World Leaders Contact List
Human Rights Violations in East Timor
Main Postings Menu