Sydney Morning Herald May 21, 2002

Brace for fight over oil, Australia told

By Tom Hyland in Dili

On its first day as an independent nation, East Timor yesterday warned Australia of a tough fight ahead for a greater share of Timor Sea oil and gas revenue, even as the two sides signed a treaty to exploit resources in the energy-rich seabed area.

The Chief Minister, Mari Alkatiri, gave the warning in his maiden speech to the first session of East Timor's parliament - just an hour before he signed the Timor Sea Treaty with the Prime Minister, John Howard.

The two countries have competing claims to the resources, and East Timor believes it has the right, under international law, to a greater share than it will receive under the treaty.

"[The treaty] does not represent, under no circumstances does it represent, a maritime border," Dr Alkatiri told Parliament, which was attended by Mr Howard and other Australian politicians and officials in Dili for independence celebrations.

The Government "will use all available instruments and international mechanisms to search for a solution", he said.

The treaty creates a joint petroleum development area, with 90 per cent of revenue going to East Timor and 10 per cent to Australia. East Timor, desperately poor and dependent on foreign aid, is expected to get $6billion in revenue from the Bayu Undan oil and gas field in the joint area over 20 years.

But an annex to the treaty - involving the Greater Sunrise field, a richer deposit with reserves worth about $30 billion that straddles the eastern corner of the joint area - has been criticised by politicians, activists and UN officials in Dili. Australia had insisted on the annex as a condition for the treaty going ahead.

East Timor will get 18 per cent of revenues from Greater Sunrise, but its Government has legal advice that the entire area could be within its maritime boundaries.

Dr Alkatiri said signing the treaty did not prejudice East Timor's boundary claim, while the Foreign Minister, Jose Ramos Horta, said he expected Australia would eventually concede a bigger share of Greater Sunrise revenue.

Mr Howard played down the prospect of further friction over the oil and gas resources following Dr Alkatiri's speech, and again denied Australia had been unfair to its impoverished neighbour.

"I was not the least surprised by what he [Dr Alkatiri] said. I expected him to say something of that kind," Mr Howard said. "We'll talk to him, we'll listen to him, but we think the way we've conducted ourselves has been fair and reasonable and we'll continue to be like that."

The signing took place in a conference room in the colonial-era government buildings on the Dili waterfront which have served as the Portuguese then Indonesian governors' offices and, more recently, the headquarters of the UN administration.

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