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Thursday December 2, 6:33 PM INTERVIEW: E Timor Pres Wants Timor Sea Border Settled

By Supunnabul Suwannakij Of DOW JONES NEWSWIRES

BANGKOK (Dow Jones)--East Timor President Xanana Gusmao stands firm in his position to seek a permanent settlement of maritime borders between his fledging nation and Australia, even though the move would put off the development of a lucrative gas field in the sea separating the two countries.

"Our policy is to continue to defend our claims (on oil and gas reserves) as part of the concept of sovereignty, which means not only the land but also all limits in the water that belongs to us," Gusmao told Dow Jones Newswires in an interview Thursday.

Negotiations between Australia and East Timor to resolve the boundary dispute and kickstart exploration and development of the US$5 billion Greater Sunrise gas field, believed to be the richest in the Timor Sea, broke down in October.

Woodside Petroleum Ltd. (WPL.AU), which owns a 33.4% stake in the Sunrise field, recently announced it would put the project on hold unless the two governments strike a deal by the end of this year. ConocoPhillips (COP), Royal Dutch/Shell Group (RD) and Japan's Osaka Gas Co. (9532.TO) also hold stakes of 30%, 26.6% and 10% respectively in the project.

However, Gusmao said there is no pressure to conclude the negotiation on maritime boundaries with Australia in the near term, despite Woodside's threat to shelve the project. He said what was more important was securing a fair deal for East Timor.

"If we have to delay the exploration or production, just delay it. (There is) no problem for us. We can wait for two, three more years or even 50 years. We're in no rush," he said.

East Timor is fighting for a maritime border to be drawn in the middle of the 600 kilometers (370 miles) of sea separating the two countries. That would place 90 percent of the oil and gas reserves on East Timor's side.

However, Australia wants its continental shelf to be the border that has been agreed with Indonesia which is some places is just 150 kilometers (90 miles) from East Timor's coastline.

East Timor's Foreign Minister Jose Ramos Horta said Monday the nation would ask the United Nations to help resolve the dispute.

Australia's Foreign Minister Alexander Downer said Wednesday the two countries can break the impasse over ownership of the vast oil and gas reserves in the Timor Sea without resorting to international organizations.

"The best way to solve the bilateral dispute is negotiation. But the negotiation hasn't given any solution because Australia behaves very very unfairly," Gusmao said. "If Australia wants to talk to us, it has to be fair and not to be so arrogant because we're small."

Other Fields Generate Enough Revenue

Gusmao said that for the talks to resume, the Australian government must return to the negotiating table with a better proposal that would take into account East Timor's sovereign rights.

Ramos Horta has accused Australia of derailing negotiations last month by making a final offer of US$3 billion in compensation over 30 years for East Timor to agree to the sea border that Australia wants.

Gusmao argued that the nation's rudimentary economy wouldn't be affected from the delay of the Greater Sunrise gas field exploration as other oil and gas fields generate enough revenue for the country.

East Timor would focus on managing the Bayu Undang gas field instead, to secure more income for the country, he said.

The Bayu Undang gas field is generating satisfactory tax revenue for East Timor and in the next 3-4 years, it is expected to generate revenue of around $100 million a year, Gusmao said. He did not say how much revenue the gas field is generating at present.

"The size of our population doesn't demand billions of dollars. We can have some millions of dollars as we've just started our development programs," Gusmao said.

East Timor, a former Portuguese colony that was invaded and annexed by Indonesia in 1975, gained statehood in 2002.

In 1999, Australia led a United Nations force that quelled violence following the former Indonesian province's independence ballot.