Subject: RT/DJ: Australia/Timor Gap: No Dispute On Sea Bed Boundary

Received from Joyo Indonesian News

also: Australia govt, Timor leader meet for energy talks

Dow Jones Newswires May 10, 2002

Australia/Timor Gap: No Dispute On Sea Bed Boundary

A commitment to unitization will be included in the treaty, but Australia's desire for a separate exchange of notes with treaty status concerning details on unitization likely won't be met.

"There will be another mechanism for dealing with the separate but important issue of how we negotiate the unitization issues," he said.

Downer played down any dispute between the two countries on sea bed boundaries between Australia and East Timor.

The boundaries are the same as those first agreed between Australia and Indonesia and include a joint development zone of about 30,000 square kilometers in the Timor Sea.

After East Timor's independence vote in 1999, Australia and East Timor began negotiating a new treaty that maintains basic terms of the previous treaty with Indonesia.

Included in the joint zone is the Bayu Undan LNG field, which will be developed by a joint venture of Phillips, Santos Ltd. (STOSY), Inpex, Kerr-McGee Corp. (KMG) and Agip S.P.A. (I.AGI).

In July last year, Downer and Australia's then industry minister, Nick Minchin, signed an agreement that paved the way for a new treaty with the United Nations Transitional Authority in East Timor and Alkatiri.

Under that agreement sea bed boundaries were set and a split of royalties from development in a joint development zone in the Timor Sea were set at 90% to East Timor and 10% to Australia.

"Those sorts of issues were all addressed in that agreement so they haven't been reopened for discussion, that has been resolved already," he said.

There were calls in late March for East Timor to seek much more favorable sea bed boundaries with Australia. Those calls have in part been pushed by Petro Timor, which claims it is the rightful owner of concessions granted in 1974 by Portugal to explore for gas and oil in the Timor Sea.

Following Indonesia's invasion of East Timor in 1975, those claims were replaced by fresh rights awarded to other companies.

Also discussed at the meetings today were tax arrangements, according to the foreign minister.

Downer also said the Australian government won't enter into a dispute between Phillips and its partners Shell and Woodside on where to haul the LNG from the Sunrise field. Phillips wants to bring the gas onshore to the Northern Territory. But Shell and Woodside want the LNG processed on a floating facility.

"Naturally we would rather that the pipeline came to the Northern Territory because that would be more beneficial to Australia," he said. But the government won't provide any subsidies to make that wish a reality, he added.

-By Iain McDonald, Dow Jones Newswires; 61-2-6208-0901; iain.mcdonald@dowjones.com


Australia govt, Timor leader meet for energy talks

CANBERRA, May 10 (Reuters) - Australian Foreign Minister Alexander Downer meets East Timor's Chief Minister Mark Alkatiri on Friday as the deadline looms to finalise a new treaty over splitting oil and gas revenues from a disputed Timor Sea area.

A spokesman for Downer said the two men would meet in Canberra but it was not clear if any details would be released following the meeting.

"The talks will be focused on the Timor Sea treaty but there is a lot of work to be done," the spokeman told Reuters.

"But we are still optimistic about getting it sorted out in time for (East Timor's) independence on May 20."

A new treaty is needed to cover production from a disputed area of sea jointly administered by East Timor and Australia which takes in the Greater Sunrise and Bayu-Undan gas fields involving Woodside Petroleum Ltd , and Phillips Petroleum Co and Royal Dutch Shell .

The current treaty expires on May 20 when East Timor, the world's newest nation, celebrates its independence after breaking free from Indonesia.

An old treaty with Indonesia split revenues equally while the new treaty will give East Timor 90 percent of government petroleum production revenues.

But there are still several hurdles blocking Australia from signing the pact.


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