Subject: E Timor: Too Early To Panic About Timor Sea Boundary

East Timor Opens Embassy In Australia's Canberra

Dow Jones Newswires December 9, 2003

E Timor Says Too Early To Panic About Timor Sea Boundary

CANBERRA -- East Timor Foreign Minister Jose Ramos-Horta said Wednesday it is too soon to fret over the final shape of a permanent maritime boundary between his impoverished nation and Australia.

Ramos-Horta said negotiations on a permanent boundary to settle the ownership of billions of dollars' worth of gas reserves located beneath the Timor Sea have just begun and it is understandable Australia is taking a tough line.

But he said Australia shouldn't allow any new exploration activity within disputed areas of the Timor Sea until a final treaty is agreed.

"We would hope Australia and everybody else with a stake in the region, bearing in mind the claims by our side, would refrain from any new actions that would complicate the issue," Ramos-Horta told the National Press Club.

He also urged Canberra to commit to monthly negotiations, rather than the biannual meetings currently scheduled.

"We would prefer to have more regular meetings, maybe once a month," he said.

Last year East Timor, fresh from winning independence from Indonesia, claimed a maritime boundary extending 200 nautical miles from its coast, overlapping Australia's own claimed boundary and putting in doubt the ownership of the Timor Sea's vast gas reserves.

While the two countries have agreed a treaty to carve up an area of the Timor Sea and provide fiscal certainty to developers, the deal is only an interim arrangement pending a fixed boundary.

That treaty favored East Timor, with Australia agreeing that the country should take a 90% share of the so-called Joint Petroleum Development Area.

The JPDA, which replaced a similar agreement between Australia and Indonesia under which the area was split 50:50, takes in such gas fields as Greater Sunrise, operated by Australia's Woodside Petroleum Ltd. (WPL.AU), and Bayu-Undan, operated by U.S. oil major ConocoPhillips (COP).

But other major gas reserves like the Lamanaria, Coallina and Buffalo projects lie outside the JPDA in waters long claimed by Australia, and they are now subject to East Timor's boundary claim.

East Timor has previously accused Australia of trying to stall the negotiation process, which East Timor hopes will be completed in three to five years.

Ramos-Horta said considerable energy will need to be devoted to the negotiations "to find a solution that is satisfactory to us."

"Our claims are solidly grounded on international law. That's our only strength. Look at East Timor. What can we do against the giant Australia?"

He predicted the process will involve "some tumultuous discussions," adding that Australian Prime Minister John Howard is determined to protect Canberra's interests.

"He never pretended...to be either Tom Cruise or Mother Theresa. He is who he is," said Ramos-Horta.

"And obviously when it comes to billions of dollars that oil experts say exist in the Timor Sea, even if John Howard were Mother Theresa he would hesitate in giving away what he actually believes belongs to his order," he said.

-By Veronica Brooks, Dow Jones Newswires;

61-2-6208-0901; veronica.brooks@dowjones.com

-Edited by Paul Godby


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