The Australian E Timor's $2.8bn oil claim By Nigel Wilson November 18, 2003

East Timor is demanding Australia hand over an estimated $US2 billion ($2.8 billion) it has earned in royalties from the Laminaria/Corallina and Buffalo oil fields in the Timor Sea.

And Prime Minister Mari Alkatiri wants production from the fields halted until a maritime boundary is agreed between the two countries.

Laminaria/Corallina, owned 50 per cent by Woodside and the remainder shared between BHP Billiton and Shell, was until recently Australia's biggest producing oil field.

Production is declining rapidly and is now about 50,000 barrels a day compared with peak output of about 180,000.

Nearby Buffalo is a small field discovered by BHP Petroleum in 1996 and now owned by the Canadian oil company Nexen Inc, which is preparing to decommission the field.

The extent of East Timor's claim on resources owned by Australia has emerged after last week's initial talks in Darwin to explore the scope of discussions on a sea boundary.

East Timor does not accept a boundary negotiated between Australia and Indonesia and has said the Timor Sea Treaty signed in Dili last year is only a temporary arrangement.

Dr Alkatiri's office said after the talks Australia was violating international law by exploiting the oil and awarding new exploration permits.

"Australia has an international legal obligation to exercise restraint in regard to the exploration of resources in a disputed maritime area," a statement issued out of Dr Alkatiri's office said. "Despite this, Australia is unilaterally exploiting the Laminaria, Corallina and Buffalo fields.

"East Timor has not received one penny of the approximately $US2 billion that Australia is estimated to collect from these fields."

The statement added that on April 22 Australia had awarded a new exploration permit adjacent to the Sunrise gas field in an area that East Timor contests.

"Resolution of the maritime boundary dispute is all the more pressing as East Timor is one of the poorest nations in the world and requires substantial resources for national reconstruction and development. East Timor would prefer to have access to its own resources to accomplish this, rather than depend on foreign aid," the statement concluded.

While East Timor's intention to seek a boundary that includes existing production west of the Joint Petroleum Development Area set out in the Timor Sea Treaty has been well flagged during the past three years, the size of the Australian government revenue the new country has identified as its has not previously been made public.

A Woodside official said last night that resolving the boundary was a matter for the two governments.

Canberra officials said last night that East Timor's estimate of the size of government revenues from Laminaria/Corallina and Buffalo was "greatly exaggerated".

And, they said, Australia had no legal obligation to halt production until the dispute was resolved.

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