Friday, December 17, 2004. 8:41pm (AEDT) E Timor cabinet passes landmark petroleum law

East Timor's cabinet has passed a landmark petroleum law that will open the door to foreign firms seeking oil and gas exploration licences and create millions of dollars in revenue for the impoverished nation.

East Timor's cabinet approved the legislation which will allow international energy firms to begin exploring the tiny South-East Asian nation's on and offshore oil and gas reserves, a statement said.

Secretary of State Gregorio de Sousa said the legal framework, to be endorsed by Parliament in the next few weeks, would create a transparent, competitive and stable model for the development of the nation's resources.

The agreement also laid the groundwork to create a petroleum fund for development in East Timor, which is still struggling to find its feet after gaining statehood in 2002 in a violence-marred separation from Indonesia.

East Timor, one of Asia's poorest nations, is looking to the energy sector as its major source of income with potentially billions of dollars of revenues available.

The country also shares oil and gas reserves in the Timor Sea with Australia and is trying to resolve a dispute over the division of the area.

-AFP