Last Update: Monday, January 16, 2006. 8:24pm (AEDT)

Gas fields deal 'short changes' East Timor

A deal signed last week between East Timor and Australia to share billions of dollars in revenue from Timor Sea oil and gas deposits has short-changed Asia's poorest country, a rights group says.

The agreement divides revenues from the Greater Sunrise field between the two countries equally.

It delays finalising their maritime border for 50 years, by which time reserves may be exhausted.

The US-based East Timor and Indonesian Action Network (ETAN) says international law experts believe as the field and others covered by the deal are closer to East Timor's coast than Australia's, they should belong to the tiny nation.

ETAN says East Timor should receive all revenue.

It says the agreement "prolongs Australia's refusal to recognise the sovereign rights of the people of Timor-Leste (East Timor)".

"Although the Government of Timor-Leste is temporarily acceding to this occupation, ETAN joins with many in Timor-Leste in the belief that the struggle for independence remains incomplete without definitive boundaries accepted by their neighbours," the group said.

East Timor has been locked in a struggle with Australia over the resource revenues since it gained independence from Indonesia in 2002.

The dispute blew up when Australia insisted that a 1970s Timor Sea boundary agreed with Jakarta should remain in place after independence.

Australia refused to negotiate the dispute at the International Court of Justice.

The 1970s boundary would have given Australia two-thirds of the maritime territory and 80 per cent of the Sunrise field.

East Timor wanted the maritime boundary to be the midpoint between the two countries.

ETAN says East Timor has boosted its share of the field to half under the deal "but it has given up other potentially lucrative areas being explored now or in the near future".

East Timor's Prime Minister, Mari Alkatari, welcomed the deal last week, saying it paved the way for East Timor to develop its own petroleum processing industry.

Oil companies which had deferred the Greater Sunrise project because of the two governments' squabbling over the boundary, said they were studying the text of the deal before resuming work on the project.