Subject: FT: E Timor expects early boundary deal

Financial Times (UK)

E Timor expects early boundary deal

By James Boxell in London and Virginia Marsh in Sydney

Published: March 21 2005 02:00 | Last updated: March 21 2005 02:00

East Timor hopes to end its stand-off with Australia over a maritime boundary dispute by as early as the middle of the year - a move that would unlock billions of dollars for one of the world's poorest states.

Talks broke down last year after the Timorese rejected Australia's offer to pay A$3bn (£1.2bn) in exchange for a 100-year postponement of boundary negotiations. This led to the suspension of an A$6.6bn gas field development - known as Greater Sunrise - in a disputed area of the Timor Sea. East Timor believes the boundary should lie at the midway point between the two nations while Canberra contends it should be the continental shelf, which comes within 70km of East Timor's coast.

However, in an interview with the Financial Times, Mari Alkatiri, prime minster of East Timor, said progress had been made in talks in Canberra this month. "There is still no agreement but we will do our best to get this resolved by May or June."

Mr Alkatiri said Australia had lifted the previous offer - it is now understood to be offering A$4bn - but still wanted a "financial" deal, that would see Canberra pay a fixed sum over several years for control of the Greater Sunrise field. He would prefer East Timor to remain as a partner. East Timor insists it would own as much as 100 per cent of the field if the maritime boundary in the Timor Sea were halfway between the two countries.

The existing boundary was negotiated in 1972 before Indonesia's 1975 invasion of the then Portuguese colony and was seen as one reason Australia did not object formally to the invasion. Woodside Petroleum, of Australia, has halted work on Greater Sunrise, a liquefied natural gas project, while the dispute continues.

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