2005-6 events and media coverage of
Australia - East Timor Boundary Dispute

At the end of 2005, Australia and Timor-Leste agreed on the CMATS Treaty, which was signed in January 2006. Follow that link for documents, analyses, and responses.

Australia's Woodside Shelving Greater Sunrise Gas Project

Asia Pulse, January 14, 2005

PERTH - Woodside Petroleum Ltd (ASX:WPL) has followed through on its warning that the A$5 billion (US$3.8 billion) Greater Sunrise gas project would be shelved if the stand-off between the East Timorese and Australian governments continued.

Staff have been progressively transferred to other projects and the company is not committing any more money to Greater Sunrise, a spokesman said.

Woodside warned investors in November the project would stall if it did not have legal and fiscal certainty by the end of last year.

"That time has come and gone and we've started to reassign people to different projects," the spokesman said.

The project is being held up by a maritime boundary and royalty dispute between Australia and East Timor.

A deal was struck between the nations last year and passed through the Australian Parliament that split revenues from Greater Sunrise 80:20.

But East Timor has said it would not ratify it until Australia showed goodwill and good faith in negotiating the permanent maritime boundary.

The Greater Sunrise field, estimated to contain 7.8 trillion cubic feet of gas, is located in the Timor Sea 450 kilometres from Darwin but only about 80 kilometres from East Timor.

If the agreement is not signed and the project's development plan abandoned it could be years before the market presented opportunities as suppliers currently enjoy, Woodside said last year.

The spokesman said today the speed at which the project could be brought back on would depend on the patience of prospective customers.

"It's a matter of how quickly the governments can resolve the issue as to how quickly we might be able to kick start it," he said.

"The government has been well aware of our position since before November, and then of course in November when we told the investment market."

Federal Resources Minister Ian Macfarlane's office said it had not received any official notification.

Woodside operates the Greater Sunrise project on behalf of joint venture partners Royal Dutch/Shell, ConocoPhillips and Osaka Gas.

ABC, January 14, 2005

The Federal Government has invited East Timor to further talks to resolve a deadlock over maritime boundaries.

The offer coincides with Woodside Petroleum announcing it will halt development of a $5 billion gas project.

Woodside has confirmed it will not commit any more money to the Greater Sunrise Gas Project, 450 kilometres north-west of Darwin.

Late last year the company warned work would stop if the governments did not reach an agreement on maritime boundaries by Christmas.

That deadline passed without an agreement.

A company spokesman says Woodside has already spent $200 million.

The spokesman says market demand will determine whether or not the project will restart, if the governments do an reach agreement.

The Federal Government is proposing that the talks be held within the next three months.

Australia invites E.Timor to new round of gas talks

Reuters, January 17, 2005

MELBOURNE - Australia has invited East Timor to resume talks on splitting billions of dollars of oil and gas revenues in the Timor Sea after discussions collapsed late last year and stalled the $5 billion Greater Sunrise project.

"We are proposing that the talks be held in the first-quarter of 2005 and are now waiting for a response from East Timor to set an exact date," Julie McDonald, a spokeswoman for the Department of Foreign Affairs and Trade, said on Monday.

A spokesman for East Timor Prime Minister Mari Alkatiri said East Timor was willing to return to the negotiating table and explore all options to find a "creative solution".

East Timor estimates the total value of known oil and gas reserves in the disputed area of the Timor Sea at more than $30 billion. The biggest single resource in those waters is the Greater Sunrise field with its reserves estimated at $22 billion to $25 billion.

Disagreement over how royalties from Timor Sea projects should be split has stalled the Woodside Petroleum Ltd. -operated Greater Sunrise project and the company said on Monday it had started re-assigning the field's 20 workers to other projects.

Perth-based Woodside had given both sides until Christmas to resolve their differences, which primarily centre on where the maritime boundary should be.

While neither government agreed on revenue splitting when they last met in October, they did agree to meet twice a year.

East Timor, which voted to break away from Indonesian rule in 1999 and remains largely dependent on foreign aid, says the border in the sea should be drawn at the midpoint between the two countries.

Australia believes the boundary should be defined by the continental shelf, which in some places lies less than 80 km (50 miles) from East Timor's southern coastline.

Woodside has a 33.4 percent stake in Greater Sunrise, ConocoPhillips has 30 percent, Royal Dutch/Shell 26.56 percent while the balance is held by Japan's Osaka Gas Co. Ltd. .

Woodside, 34 percent owned by Shell, said the joint venture had so far spent about $160 million on the project which was originally slated to deliver its first liquefied natural gas (LNG) by 2010.

Australian Energy Minister Ian Macfarlane said on Thursday he would not be promoting Greater Sunrise gas as a potential supply source for the U.S. West Coast during a trip there this week to push Australian LNG.

Australia is seeking to secure one-third of the California gas market by 2025 by exporting to proposed offshore terminals in the United States and Mexico in sales worth A$50 billion ($38 billion), Macfarlane said.

Woodside shares closed up 1.8 percent at A$21.37 in a firmer overall market. ($1=A$1.32)

Australia, Timor Set To Resume Talks In March - Source

CANBERRA -(Dow Jones)- East Timor is poised to formally accept Australia's invitation to resume negotiations on a permanent maritime boundary.

Talks are expected to be held in Canberra next month, forming part of a previously agreed timetable of six-monthly meetings in a bid to resolve ownership of vast oil and gas reserves in the Timor Sea, a person familiar with the situation told Dow Jones Newswires Thursday.

Woodside had warned it needed fiscal certainty on the project by the end of 2004 to capture a 2010 marketing "window" for LNG exports.

The company recently restated it won't be spending any more money to advance Sunrise and has reassigned staff to other projects.

East Timor is fighting for a maritime boundary in the middle of the 600 kilometers of sea separating the two countries.

Australia, instead, argues the boundary should be the edge of the continental shelf, which in some places is just 80 kilometers from East Timor's coastline. That border puts the bulk of natural resources in the Timor Sea under Australia's control.

Downer hopeful on Timor Sea deal

AAP, February 7, 2005

Foreign Minister Alexander Downer said he was cautiously positive about reaching a deal with East Timor on how to share lucrative energy reserves beneath the Timor Sea.

Australia and East Timor have so far failed to reach agreement on how best to divide the estimated $A41 billion worth of oil and gas deposits lying beneath the sea between Australia and East Timor.

Talks last year broke down when East Timor accused Australia of making an ultimatum on the boundary terms.

Mr Downer told reporters the discussions were to resume next month.

"We are moving forwards towards constructive discussions with the East Timorese in March when our next meeting is scheduled to take place," he said.

"From my contacts with the East Timorese ... I am cautiously positive about how those talks will go forward.

"These are difficult issues, we just take them forward piece by piece."

German Foreign Minister Joschka Fischer raised the issue with Mr Downer during a bilateral meeting at the request of East Timorese foreign minister Jose Ramos-Horta.

Mr Ramos-Horta asked Mr Fischer to take up the issue during his meeting with Mr Downer and Prime Minister John Howard.

Mr Fischer said he was confident the issue would be resolved amicably by the two nations.

"These pending issues should be settled between two friendly nations," he said.

East Timor, Australia to meet in mid-March for boundary talks

Singapore (Platts)--7 Feb 2005

East Timor and Australia have agreed on a mid-March meeting in another bid to resolve their maritime boundary dispute, which is holding up a major gas and LNG project development in the Timor Sea. "We have confirmed the meeting will be in mid-March, in Canberra," a spokesman for the Timor Sea Office in Dili said Monday, adding that the exact dates had not yet been finalized. The East Timorese delegation will be led by Jose Teixeira, East Timor's secretary of state for energy and mineral resources, who also headed the last round of talks in Dili over Oct 25-27, he said. The two sides would examine a "creative solution," the spokesman said, an allusion to an earlier attempt to put off the complicated drawing of a permanent maritime boundary in the Timor Sea for a period of time in return for Australia financially compensating East Timor for any lost revenues. After three rounds of talks last September and October over a "creative solution" flopped, East Timor had hardened its stance to signal that future negotiations would return to its maritime boundary demand.

East Timor, which became independent from Indonesia in November 1999, wants an equidistant boundary in the petroleum-rich Timor Sea, which is at odds with Australia's claim to a continental shelf extending close to the East Timor coastline. The dispute forced a Woodside-led consortium to put its $5-bil Sunrise gas and LNG project development in the Timor Sea on ice at the end of last year. East Timor has refused to ratify the Sunrise international unitization treaty signed with Australia in March 2003 until the boundary row is resolved. The IUA puts 79.9% of Sunrise in waters under Australian jurisdiction and only 20.1% in the Joint Petroleum Development Area, from which East Timor and Australia share oil and gas revenues as 90:10. East Timor believes a mid-point maritime boundary based on international convention would place almost all of Sunrise in its territory. Australia in last year's talks was said to have offered A$3-5-bil ($2-4-bil) to East Timor in return for the latter putting aside its boundary claim for 100 years.

East Timor came out of the last round of talks saying it wanted "participation" in the oil and gas projects, not just monetary compensation. In a round of finger-pointing that followed, East Timor lamented that Australia had rejected all its suggestions for "resource sharing", while Australia said it was surprised that East Timor had balked at what had originally been its own proposal. Australian Resources Minister Ian Macfarlane last week said, "I've heard speculation that East Timor may be reconsidering its position." In an interview with Platts Feb 2, Macfarlane said: "We made an extremely generous offer [to settle the boundary dispute] but Sunrise can't progress until East Timor comes back with a new perspective." Macfarlane added that Woodside had made it clear to East Timor that it was going "full steam ahead" with plans to develop an LNG project in Australia's Browse basin and would not invest any more capital in Sunrise while the hiatus continued. "East Timor is taking a very big risk," the minister warned.

The Sunrise partners--Woodside (33.44%), Shell (26.56%), ConocoPhillips (30%) and Osaka Gas (10%)--had been studying three development options to develop the field's 8.4 Tcf reserves. These were an onshore LNG plant in East Timor, a floating LNG plant, and an onshore LNG plant in the Australian city of Darwin. The consortium of late had appeared to be leaning toward the Darwin option, which had also disappointed Dili. Woodside's rival Browse LNG project is being planned as a 7-mil mt/year that could be onstream by 2011. East Timor, world's poorest nation, is banking on oil and gas developments in the Timor Sea to kick-start its domestic industry and economy.

Interview: Timor Positive Ahead Of Fresh Boundary Talks

By Veronica Brooks
Dow Jones Newswires, February 8 2005

CANBERRA--East Timor will enter another round of maritime boundary talks with Australia in a positive manner but the fledging nation will continue to press Canberra to agree to more regular negotiations.

As for any confidence Australia and its impoverished neighbor can thrash out a permanent boundary to settle ownership of vast oil and gas reserves in the Timor Sea, East Timor's secretary of state for tourism, environment and investment, Jose Fernandez Teixeira, is more guarded.

"I always approach negotiations on an optimistic and positive note. We'll see. We can't pre-empt anything," he said of the meeting scheduled for March 15-17 in Canberra.

"We would certainly like them to be held much more frequently than twice a year...because we think these issues are critical between our two countries and we should resolve them," he told Dow Jones Newswires in an interview.

But Teixeira said Dili isn't confident that Woodside Petroleum Ltd.'s (WPL.AU) stalled US$5 billion Sunrise liquefied natural gas project can be revived by any breakthrough on the protracted border dispute.

"I think the company has made it pretty clear. They're not investing any more in it (Sunrise)," said Teixeira.

"Those actions don't give you much room to see there is any optimism. They've made a decision to move on with investment elsewhere," he added.

Woodside has put the brakes on its Sunrise development, having last year warned Canberra and Dili that it needed fiscal certainty on the project by the end of 2004 to capture a 2010 marketing "window" for LNG exports.

Woodside recently restated it won't be spending any more money to advance Sunrise and has reassigned staff to other projects.

Woodside owns 33.4% of Sunrise, regarded as the richest prize in the Timor Sea. Its partners are ConocoPhillips (COP) with 30%, Royal Dutch/Shell Group (RD) with 26.6% and Japan's Osaka Gas Co. (9532.TO) with 10%.

The 2004 deadline passed after Canberra and Dili, during talks in October, failed to agree on a formula for splitting the billions of dollars worth of oil and gas revenues.

East Timor is fighting for a maritime border in the middle of the 600 kilometers of sea separating the two countries.

However, Australia argues the boundary should be the edge of the continental shelf, which in some places is just 80 kilometers from East Timor's coastline. That border puts the bulk of natural resources in the Timor Sea under Australia's control.

East Timorese Foreign Minister Jose Ramos-Horta, the 1996 Nobel peace laureate, said at the weekend that a boundary deal was within reach.

Late Monday, his Australian counterpart Alexander Downer said he too is optimistic an agreement can be struck.

"From my contacts with the East Timorese over the last couple of weeks, I'm cautiously positive about how those talks will go forward," Downer told reporters.

Teixeira said he is hopeful future boundary negotiations are based on genuine respect for each nation's rights under international law.

"We can only hope discussions take place within that framework and wait and see what comes out of it," he said.

"These are two sovereign nations and we have good cooperation in other areas. The question becomes whether we build on those relationships," he said.

Australia took action in 2002 aimed at strengthening its position in boundary talks with one of the world's poorest nations by withdrawing from the maritime jurisdiction of the International Court of Justice, thereby blocking any East Timorese appeal should the two sides prove unable to agree a boundary.

Doug Chester, Australia's chief negotiator in the border row, said last week Canberra is happy to focus on formal legal negotiations to settle a permanent maritime boundary but is also open to "creative solutions" that would allow development of oil and gas projects pending a permanent boundary.

East Timor Moves to Open Up Oil and Gas Fields

Rowan Callick Asia-Pacific editor
Australian Financial Review February 7, 2005

East Timor is pressing on with plans to become a major new gas and oil producer, despite the stalling last month of the $5 billion Greater Sunrise project amidst mutual recriminations with Canberra.

Its parliament is on the verge of approving a new legal regime, following which the government will invite tenders for exploration. A seismic survey of the part of the Timor Sea that is clearly within the country's boundaries is already under way. And the government is establishing a state-owned oil company.

Jose Teixeira, East Timor's secretary of state for the environment and investment - effectively the resources minister - told The Australian Financial Review that East Timor had substantial indicators of oil and gas on land and under sea, beyond the areas currently contested with Australia.

"We have begun the process of creating a transparent, competitive and very modern licensing regime based on production-sharing contracts, with a competitive fiscal regime."

The process of drafting the legislation took about 18 months, he said. "We had an international consultation process, seeking opinions from the petroleum industry, and feedback from across the country, and now it is before parliament. I don't see any issues with its being passed within a month."

The fiscal regime had been benchmarked, he said, against those of Australia, Indonesia and Malaysia, to ensure its competitiveness.

The offshore seismic survey covering 20,000 square kilometres is being conducted by China's BGP, owned by PetroChina, and Norwegian company Global Geo Services.

"It's a non-exclusive, multi-client survey, and we shall use the data for an international bidding round from April to June, to be followed by the award of the first exploration licences, both on and offshore."

Mr Teixeira said the national oil corporation would operate commercially, in both upstream and downstream activities.

East Timor is also establishing a Petroleum Fund to manage the potential gas and oil revenues. Mr Teixeira said the fund established by Norway was one of the models.

He said: "We are calling it Norway Plus. It will involve checks and balances, with clear and separate publication of all payments."

The fund will be administered by parliament, he said. It will feature a consultative council, including appointees from civil society.

Mr Teixeira said that the Greater Sunrise field, which operator Woodside Petroleum said last month it had put on hold, was an important project, in which investment was already quite advanced. "It presents a great opportunity to grow partnership with our neighbour Australia, but it's not our only option" for becoming an oil and gas producer.

Since talks broke down over Greater Sunrise, Canberra broke the stand-off, in mid-January, to invite Dili to resume discussions, but no date has yet been fixed.

Stop stealing East Timor’s oil

By Jon Lamb
Green Left Weekly, February 9, 2005

A 30-second television advertisement screened on January 26 during the Australian Open tennis tournament has returned to the limelight the theft of East Timor’s oil and gas resources by PM John Howard’s Coalition government. At prime time and to a record number of viewers, the message was very clear: stop stealing East Timor’s oil and gas wealth.

Businessman Ian Melrose’s TV advertisement notes that “The Howard government has stolen $2 billion dollars in tax revenue from gas and oil royalties, which East Timor needs to create a working health system”. In an advertisement printed in major newspapers on the same day, Melrose stated that this stolen revenue “is contaminating the Australian economy”.

The newspaper ad accurately highlights the Australian government’s refusal to abide by international law to settle the disputed maritime boundary: “By withdrawing from the relevant jurisdiction of the International Court of Justice two months before East Timor became a nation, John Howard’s government prevented East Timor from taking the dispute over gas and oil to an independent arbitrator. Howard’s government is denying the East Timorese their legal entitlements.”

In an interview on ABC Radio on January 27, Melrose made his intention clear to keep this advertisement campaign, which he initiated prior to the federal election, running for some time. He said that during “‘all those sorts of events where the government tries to gain glory, we will be advertising the poor conduct of the Australian government in relation to East Timor”.

Predictably, the Howard government responded to the advertisements with misinformation and half-truths. According to an unnamed “senior Australian official close to the boundary negotiations”, quoted in the January 28 Australian, only $15 million in royalties has been received by the Australian government, not $2 billion as stated by the ad. This, however, is the revenue only from within the area in the Timor Sea covered by the Joint Petroleum Development Authority. It does not include the revenue stolen from fields outside the JPDA that rightfully belong to East Timor.

Tomas Freitas, an activist and campaigner with the East Timorese non-government organisation La’o Hamutuk, told Green Left Weekly: “The problem here is that the Australian government won’t even acknowledge that East Timor claims areas outside the JPDA, like Laminaria and Corallina. Australia pretends the whole dispute is about 10% of Bayu-Undan. It’s not Australia’s decision what fields are contested — if East Timor claims them, and Australia also claims them, they’re contested. This is a Goebbels-type big lie from Australia — they keep saying it over and over again as if that makes it true.”

La’o Hamutuk is part of the Movement Against the Occupation of the Timor Sea (MKOTT), an alliance of East Timorese organisations campaigning for East Timor’s sovereign rights in the Timor Sea. Freitas said: “Our plan for this year is to focus our campaign in Australia; our target is the people of Australia. They have to know that their government is stealing our oil and gas from the Timor Sea.

“The issue is fundamentally the Australian people getting their own government to follow international law. In a sense, it’s the East Timorese activists like MKOTT who are in solidarity with the Australians, not the other way around. The Australian people should take the primary responsibility for this effort, as it’s their government that’s wrong.”

The Howard government is taking steps to re-start the negotiations on the Greater Sunrise gas field that broke down late last year. Australian negotiators tried to induce the Timorese government to accept a once-off payment of $3 to $4 billion, about half of what East Timor is rightfully entitled to.

According to Freitas, “The negotiations broke down because Australia wants to pay East Timor a little money and have East Timor give up its claims to the resources. But East Timor wants not only money (and more than the most recent Australian offer) but also control over how the oil and gas is developed. Australia refused to even discuss that.”

Along with the diplomatic bullying and intimidating tactics applied in 2004, we can also expect that the government will attempt to keep the public’s attention away from the plight of the mass of impoverished East Timorese who are trying to survive on less than US$1 a day.

The dire economic and social conditions that most East Timorese people face are no better reflected than in the area of health care, as Melrose’s advertising campaign highlights. The majority of the population live in rural villages, often isolated and far from medical facilities or hospitals. There are impassable roads during the wet season, electricity is scant and telecommunications are next to non-existent. Curable and preventable diseases are life threatening for most in these circumstances.

Despite the best efforts of local medical staff, international volunteers and aid workers, there are simply insufficient resources to provide adequate health care to meet the needs of most East Timorese. The most recent World Bank and United Nations Development Program health statistics for children are a sobering reminder of the situation at present in East Timor:

East Timor is currently suffering an outbreak of a deadly strain of dengue fever. At least 10 people died in Dili during January and a further 84 were hospitalised, many of them suffering painful symptoms including internal haemorrhaging. Such an occurrence is unimaginable in Australia today. The city of Darwin (around 700 kilometres away from Dili) has not reported any cases of dengue since the 1950s.

These horrendous conditions could be alleviated if East Timor is allowed to gain full sovereignty over its resources in the Timor Sea and direct the income from this towards developing its infrastructure.

“We have been discussing these issues with our government. The new regime laws were passed by the council of ministers in December, and during this week the draft law will be going to the parliament to debate. La’o Hamutuk wrote a submission about that, and another about the plans for managing the petroleum revenues”, said Freitas.

Freitas and other human-rights and solidarity campaigners in East Timor are wary about the impact of dependence on these resources. “The pattern of every oil-producing country around the world that wasn’t rich before they started producing oil is that the oil does not benefit the people of the country — but only helps international oil companies, people in rich, oil-consuming nations, and sometimes a few corrupt leaders”, Freitas explained.

“If East Timor is to avoid this ‘resource curse’, strong measures need to be taken, especially since our government and civil servants are inexperienced and our people have experienced much corruption during the Indonesian occupation. East Timor needs laws that protect the interests of future generations against oil companies and others who don’t put our people’s and communities’ interests first.”

Timor Sea compromise near

By Sandra O'Malley
The Australian, 4 March 2005

AUSTRALIA and East Timor are on the verge of finding common ground about how they should share the huge wealth generated from the sea between the two nations.

After nearly a year of negotiations, both sides at last appear willing to broker a compromise on carving up the oil-rich Timor Sea energy reserves.

At stake are oil and gas deposits worth an estimated $41 million.

Under an interim deal signed in May 2002, East Timor is entitled to 90 per cent of royalties from oil and gas developments in the area under negotiation.

The deal also included an agreement on the Greater Sunrise field, which gave Australia 79.9 per cent of royalties, because most of the project's area was located in Australian jurisdiction.

Australia has ratified the Greater Sunrise component but East Timor has so far refused.

Talks will resume in Canberra on Monday after unsuccessful rounds in Dili and Darwin last year.

East Timorese foreign minister Jose Ramos Horta is confident an agreement can be reached, possibly as early as the middle of the year.

"I know that (Foreign Minister) Alexander Downer is making every effort to accommodate our views and interest," he told AAP.

"Our side is also showing a lot of understanding and flexibility in regard to Australia's views and position."

Negotiations reached a stalemate at the end of last year, with East Timor accusing Australia of issuing ultimatums and adopting a "take it or leave it" attitude with its smaller neighbour.

In November last year, Dr Ramos Horta went as far as to threaten to go to the United Nations for help but no longer sees such drastic action as necessary.

In an effort to smooth a resolution, East Timorese Prime Minister Mari Alkatiri wrote to Prime Minister John Howard.

"I know that letter had very good reception in Canberra," Dr Ramos Horta said.

"So I'm confident that we will reach a satisfactory agreement."

This time round the discussions will focus on a compromise which would involve setting aside permanent maritime boundary talks for up to a century.

"Our position is that permanent boundaries should be put off for some considerable time," an Australian official said recently.

That view finds favour with East Timor.

"That's been my view for a long time that we should set aside for an agreed time the issue of maritime boundaries," Dr Ramos Horta said.

"Without prejudice to either side over sovereignty claims, we should focus on revenue and resource sharing."

East Timor will also put forward ideas that would enable the country to benefit from downstream processing from existing projects, which are all directed to Darwin.

"Can we find a way that the downstream activities of Greater Sunrise also involve East Timor?" Dr Ramos Horta said.

Another suggestion is for jobs from developments based in Darwin to go to East Timorese workers.

"Another thing the Australian Government could consider is a package of job creation initiatives in the Northern Territory for the East Timorese in and around the gas activities," Dr Ramos Horta said.

East Timor Says More Boundary Talks Planned With Canberra

By Veronica Brooks
Dow Jones Newswires March 8, 2005

CANBERRA -(Dow Jones)- A spokesman for the East Timorese government said Wednesday the latest round of maritime boundary negotiations between Dili and Canberra have concluded and more discussions are expected to be held soon.

"Following communication between the two prime ministers (of East Timor and Australia), negotiations are progressing," the spokesman told Dow Jones Newswires.

"Officials are working through details and both countries have agreed to hold further talks soon," he said.

East Timor and Australia resumed talks in Canberra on Monday, looking to thrash out a so-called "creative solution" that would allow the development of oil and gas projects in the Timor Sea pending a permanent boundary being settled.

Impoverished East Timor's economic well-being rests on Dili's bid for a major redistribution of royalties from the vast oil and gas deposits that lie beneath the sea that divides the two countries.

This week's talks marked the third round of boundary negotiations between Dili and Canberra in 11 months.

Top level diplomatic negotiations broke down in October, prompting oil and gas producer Woodside Petroleum Ltd. (WPL.AU) to shelve its US$5 billion Sunrise liquefied natural gas project.

The breakdown meant Woodside couldn't meet its end-2004 deadline for legal and commercial certainty that would allow it to capture a 2010 marketing "window" for LNG exports.

Woodside recently restated it won't be spending any more money to advance Sunrise and has reassigned staff to other projects.

Woodside owns 33.4% of Sunrise, regarded as the richest prize in the Timor Sea. Its partners are ConocoPhillips (COP) with 30%, Royal Dutch/Shell Group ( RD) with 26.6% and Japan's Osaka Gas Co. (9532.TO) with 10%.

Australia and East Timor have agreed to an interim revenue-sharing deal covering a part of the Timor Sea that takes in the ConocoPhillips-operated Bayu Undan field.

This Joint Petroleum Development Area splits the government revenues 90-10 in East Timor's favor.

But East Timor has so far refused to ratify a second revenue-sharing deal known as the International Unitization Agreement. Under this deal, 80% of Woodside's Sunrise gas field would fall within Australian waters and the remaining 20% in the JPDA.

Timor Sea Boundary Negotiations End

Associated Press, 9 March 2005

The latest round of negotiations between Australia and East Timor on how to divide billions of dollars in revenues from sea bed oil and gas ended Wednesday with an agreement to hold more talks soon, a negotiator said.

East Timor's head negotiator, Jose Teixeira, declined to comment on how the negotiations in the Australian capital, Canberra, had progressed over the past three days.

"We've agreed to further talks soon," Teixeira told The Associated Press.

Australian Prime Minister John Howard and his East Timorese counterpart, Mari Alkatiri, exchanged letters to ensure the negotiations could proceed, Teixeira said. He did not describe the details of the letters.

The agreement to continue talks on how to share energy resources in the Timor Sea, which separates one of the region's richest nations from one of its poorest, appears to be a positive development.

The negotiations broke down acrimoniously last October, with each side accusing the other of derailing a solution to the dispute over where their maritime boundary should lie.

At stake is an estimated US$30 billion (euro23 billion) in seabed oil and gas royalties.

East Timor wants the border to lie in the middle of the 600 kilometers (370 miles) of sea separating the two countries.

However, Australia wants the same boundary it set with Indonesia, which occupied East Timor in 1975-1999. In some places, that boundary is just 150 kilometers (90 miles) from East Timor's coast.

Australian officials said before the most recent talks that they would seek a "creative solution" that would enable the US$5 billion (euro3.8 billion) Greater Sunrise gas field - the largest in the Timor Sea - to be tapped without the permanent boundary question being settled.

Woodside Petroleum Ltd., one of the companies hoping to pump oil and gas out of the region, shelved the Greater Sunrise project last year because the two countries had failed to broker a revenue-sharing deal.

Australia insists that any solution must provide Woodside and its partners with legal certainty to proceed and must postpone any agreement on a permanent maritime boundary for at least 50 years.

Postponing the boundary agreement is aimed at ensuring that it remains in place until the seabed energy reserves are exhausted. Australia would pay East Timor compensation for accepting those terms.

If East Timor wants to first settle the boundary, Australia has warned the negotiations will drag on for decades.

Teixeira declined to say whether negotiations were continuing toward a "creative solution."

"While negotiations are on going, I don't think I should create any further speculation about the talks," he said. "We're working through details in respect to each party's position."

Australia's agreement to continue negotiations soon suggests a creative solution remains on the table. Before the prospect of such a solution was raised, Canberra would only agree to hold negotiations every six months, while Dili wanted the rounds to be monthly.

Australia, Timor Likely To Resume Boundary Talks In April

By Veronica Brooks
Dow Jones Newswires; 29 March 2005

CANBERRA -(Dow Jones)- Australia and East Timor are expected to resume maritime boundary negotiations in Dili late next month, a senior Canberra official said Wednesday.

"It's not absolutely confirmed yet but it's likely to be the last week of April and likely to be in Dili," the official from the Department of Foreign Affairs & Trade told Dow Jones Newswires.

The dates being considered for the three-day talks are April 26, 27 and 28.

The two parties will continue to focus on a "creative solution" proposed by East Timor that would allow oil and gas projects in the Timor Sea to be exploited, pending a permanent boundary being settled, the official said.

The last round of top-level diplomatic negotiations was held in Canberra in early March.

"There's still a bit of work to be done. It was all very good in March and we sorted out of a number of issues and we are getting a better understanding of what Timor is proposing," said the official.

"There's no paper on the table. That's why we probably won't finish ( negotiations) at the end of April.

"Assuming everything goes well, then you'd imagine there would need to be another discussion fairly soon after to nail it down," the official added.

Impoverished East Timor's economic well-being rests on Dili's bid for a major redistribution of royalties from the vast oil and gas deposits that lie beneath the sea that divides the two countries.

Negotiations broke down in October last year, prompting oil and gas producer Woodside Petroleum Ltd. (WPL.AU) to shelve its US$5 billion Sunrise liquefied natural gas project.

The breakdown meant Woodside couldn't meet its end-2004 deadline for legal and commercial certainty that would allow it to capture a 2010 marketing "window" for LNG exports.

Woodside has said it won't spend any more money to advance Sunrise and has reassigned staff to other projects.

Woodside owns 33.4% of Sunrise, regarded as the richest prize in the Timor Sea. Its partners are ConocoPhillips (COP) with 30%, Royal Dutch/Shell Group ( RD) with 26.6% and Japan's Osaka Gas Co. (9532.TO) with 10%.

Australia and East Timor have agreed to an interim revenue-sharing deal covering a part of the Timor Sea that takes in the ConocoPhillips-operated Bayu Undan field. This Joint Petroleum Development Area splits the government revenues 90-10 in East Timor's favor.

But East Timor has so far refused to ratify a second revenue-sharing deal known as the International Unitization Agreement. Under this deal, 80% of Woodside's Sunrise gas field would fall within Australian waters and the remaining 20% in the JPDA.

Success in the "creative solution" would mean negotiations between Australia and its northern neighbor on a permanent boundary would be postponed for decades until the Sunrise resource was exhausted.

And if the parties resort back to thrashing out a permanent maritime border, this process will take many years.

In terms of a permanent boundary, Dili wants a border in the middle of the 600 kilometers of ocean separating the two nations.

However, Canberra argues the boundary should be the edge of the continental shelf, which in some places is just 80 kilometers from East Timor's coastline. That border would put the bulk of natural resources in the Timor Sea under Australia's control.

East Timor, Australia closer to gas deal

Reuters, May 13, 2005

MELBOURNE, May 13 (Reuters) - East Timor and Australia inched closer to ending a bitter row over billions of dollars of gas reserves in the Timor Sea on Friday after negotiators signed a draft deal on the yet-to-be-developed Sunrise gas field.

Australian Foreign Minister Alexander Downer said the deal would be worth an additional $2 billion to $5 billion for tiny East Timor, and that a further round of talks was now unlikely, leaving only approval from both countries' parliaments in the way of a final agreement.

"We've made very good progress over the last couple of days with these negotiations with East Timor and I think we really are on the threshold of an agreement subject to there being some ministerial objection which at this stage we can't anticipate," Downer told reporters.

The latest talks ran for two-and-a-half days in Australia's largest city, Sydney and follow several rounds of negotiations which began in April last year.

The breakthrough draft agreement was drawn up in East Timor's capital Dili two weeks ago. Its terms have East Timor postponing the establishment of a border across the Timor Sea for up to 60 years in exchange for additional revenue.

Until a permanent boundary exists, revenues from oil and gas fields from a shared 62,000 square kilometres (24,000 square miles) zone are split 90:10 in East Timor's favour.

The Greater Sunrise field straddles the shared zone, with 20 percent falling inside the zone and 80 percent in Australian waters.

WOODSIDE STILL WAITING

Australia-listed Woodside Petroleum Ltd. wants to develop the field at a cost of A$6.6 billion ($5.1 billion) but stalled the project when talks collapsed in December last year.

While Woodside has welcomed recent progress between the two countries, the Perth-based company has said it needs legal and fiscal certainty and a market for the gas to restart the project.

Since the project stalled, Woodside has given priority to developing the Pluto gas field and the Browse Basin gas fields off Western Australia.

The Greater Sunrise field contains an estimated 8 trillion cubic feet (225 billion cubic metres) of gas.

Woodside has said the Pluto discovery could contain more than 2.5 trillion cubic feet of gas while Browse holds some 20 trillion cubic feet.

Greater Sunrise revenues will be vital for East Timor, which is still reliant on foreign aid. East Timor gained independence in 2002 after centuries of Portuguese colonial rule and 24 years of occupation by Indonesia.

Woodside has a 33.4 percent stake in Greater Sunrise, ConocoPhillips has 30 percent, and Royal Dutch/Shell 26.56 percent. The balance is held by Japan's Osaka Gas Co. Ltd.

Woodside is 34 percent-owned by Shell.

Woodside shares ended 3.95 percent down at A$23.08 trade in a weaker overall market. ($1=A$1.30)

Australia, East Timor Complete Talks on Expected Timor Sea Pact

By Angela Macdonald-Smith
Bloomberg, 13 May 2005

Australia and East Timor completed the latest, and possibly last, round of talks between officials on the split of royalties from oil and gas fields in the Timor Sea.

``Further substantial progress'' was made during the talks, which ended in Sydney today, Australia's Department of Foreign Affairs and Trade said in an e-mail. The dispute over royalties and sea boundaries caused Woodside Petroleum Ltd. to halt work Dec. 31 on its proposed $3.7 billion Sunrise gas project.

The two countries last month agreed on ``key elements'' of a revenue-sharing pact that may provide East Timor with as much as A$5 billion ($3.9 billion) of additional revenue, Australian Foreign Minister Alexander Downer said on April 29. As part of the deal, East Timor agreed to ratify an accord on the Sunrise project and to defer talks on permanent sea borders, he said.

``There is unlikely to be a need for a further round of negotiations,'' the department said. ``There will now be further consideration of the overall package at the political level in East Timor.''

East Timor, or Timor-Leste, broke away from Indonesia, Southeast Asia's biggest oil producer, in May 2002 after a 24- year armed struggle. It started talks in April 2004 with Australia in a bid to extend its boundaries to a mid-point between the two countries, which would place all of ConocoPhillips's Bayu-Undan gas field, the Sunrise, Laminaria, and Corallina fields customers under East Timor's jurisdiction.

Last year, East Timor declined to ratify a treaty on revenue- sharing from the Sunrise project, saying the existing boundary gives Australia too big a share of royalties.

The agreement between Australia and East Timor could result in East Timor receiving between A$2 billion and A$5 billion depending on oil and gas prices, in addition to its 90 percent share of royalties from fields in an area jointly administered by Australia and East Timor, Downer said April 29.

The months of negotiations between the two countries were ``little more than a waiting game'' as Australia was able to stall until the smaller country ``buckled under financial strain,'' Stratfor, an Austin, Texas-based intelligence provider, said May 2.

``The Timorese, needing fast cash flow, were forced to accept the Australians' offer in order to survive, regardless of their position in the sea boundary dispute,'' Stratfor said.

Woodside and its partners in Sunrise, which include Royal Dutch/Shell Group and ConocoPhillips, will wait for ``legal and fiscal certainty'' before resuming work on the project, Roger Martin, a spokesman for the Perth-based company, said May 2. Osaka Gas Co. also owns a stake in the Sunrise field.

Procrastination puts Greater Sunrise potential under a cloud

By Nigel Wilson
the Australian, 7 Jan 2006

As the ink dries on the new petroleum revenue sharing agreement between Australia and East Timor, scheduled to be signed in Sydney later next week, many will be left pondering whether it is a triumph of form over substance.

Three years of often acrimonious talks have resulted in an Australian commitment to transfer up to $14.5 billion to East Timor over the next 20 years from revenues gained from Timor Sea developments.

But by some counts the chances of a commercial development in the Timor Sea are now less than they were three years ago. It could all have been so different.

In 2002, East Timor signed an agreement to share revenues from Woodside's Greater Sunrise gas reservoirs 20:80 with Australia (80 per cent of the reservoirs are outside the joint petroleum development area (JPDA) in the Timor Sea Treaty between the two countries).

Revenue from developments in the JPDA such as ConocoPhillips's Bayu Undan gas recycling and LNG project are split 90:10 in East Timor's favour.

In 2002, Woodside and its Greater Sunrise partners - ConocoPhillips, Shell and Osaka Gas - were confident a world-scale LNG project involving investment of around $US5 billion ($6.7 billion) could have been developed on the Sunrise and Troubadour reservoirs.

While the Australian parliament ratified the so-called Greater Sunrise International Unitisation Agreement, East Timor did not.

Despite extensive negotiations before the agreement, East Timor Prime Minister Mari Alkatiri refused to introduce the IUA into the East Timorese parliament, saying it would gain only one vote - his own - because it was deemed unfair to East Timor.

From that day on, the development potential of Greater Sunrise diminished alarmingly to the situation we have today where very few analysts can see it making a contribution to either country before 2020.

Woodside clearly saw the East Timorese lack of action as a breach of faith and subsequent developments have yet to overcome that view.

The IUA was used as a lever by East Timor to force Australia into a maritime boundary agreement that would have handed control of potentially huge petroleum reserves - estimated by the United Nations at more than $US40 billion when crude oil prices were less than half what they are now - to Dili.

That campaign developed moral overtones, with Australia being accused of lacking generosity in refusing to accept the East Timorese view of international boundaries.

After all, East Timor's people are among the poorest in the world and Australia's among the richest. Was it any skin off our nose to cede Timor Sea resources to East Timor?

The events of the past two years in the international oil market have demonstrated that shorn of moral criticism Australia's stance, advocated by Foreign Minister Alexander Downer, has been the correct one in the national interest.

While oil prices have soared, and the world's dependence on Middle East supplies grows, it is difficult to concede that Australia's national interest is best served by handing control of petroleum resources to another country.

The difficulty is that the prospect of early development of Timor Sea resources lies with big oil and it is safe to say big oil is less than impressed with the lean to Marxist Leninism adopted by East Timor.

Woodside has so far resisted the Government's argument that it will only approve Greater Sunrise if the LNG processing facility is located in East Timor.

ConocoPhillips has beenlooking elsewhere for gas reserves to expand its LNG operations at Darwin.

Both the Caldita reservoir, which ConocoPhillips owns jointly with Santos, and the Abardi discovery, controlled by Japanese explorer Inpex, are now favoured as potential supply sources ahead of Greater Sunrise.

And in the past two years the LNG market has changed dramatically.

China is no longer seen as the automatic destination for new Australian LNG: Beijing does not accept that market forces have lifted world LNG prices from three years ago when the landmark $25 billion Guangdong contract was signed with the North West Shelf gas project.

Greater Sunrise has been left behind by Chevron's Gorgon project, more contracts for the NW Shelf and by Woodside's Pluto prospect which has emerged only since last April.

Dr Alkatiri last month described the completion of the revenue sharing agreement as "very positive."

But at the same time the East Timorese leader indicated it could be several months before the revenue sharing agreement was ratified by the parliament in Dili and Canberra sees no urgency for the agreement to be introduced in the House of Representatives, either.

It is understood East Timorese officials were in Perth this week attempting to engage Woodside in discussions on this prospect but were politely rebuffed, with Woodside maintaining there will be no Sunrise project until East Timor ratifies the revenue sharing agreement. Once bitten - having spent around $200 million with its partners in discovering and attempting to develop Greater Sunrise for no return - Woodside is twice shy.

There are better places for it to risk its shareholders' money.

Final details of the Sydney signing ceremony have yet to be worked out.

But it is likely that the revenue sharing documents will be signed by Mr Downer and his East Timor counterpart, Jose Ramos Horta, with Dr Alkatiri and possibly John Howard as formal witnesses.

What is likely to be absent is any representation from the Greater Sunrise companies.

As it is a government agreement, Woodside maintains that it would be inappropriate for it to be represented.

That is a telling stance in terms of how the development of Greater Sunrise now ranks in Woodside's palette of LNG opportunities.

The Timor Sea - Status Report and Analysis
Pacts clear legal fog to let Timor Sea operations take off

by Damon Frith
Weekend Australian, 1 April 2006

THE Timor Sea has long been a beacon for oil and gas explorers, but territorial disputes between Australia and its closest Asian neighbour have hampered efforts to determine the true significance of the region. The dispute has already caused the collapse of the $10 billion Sunrise project and the creation of a gas hub in Darwin, but the corner may be about to be turned.

With little fanfare, the Federal Minister for Industry and Resources Ian Macfarlane and the Prime Minister of the Democratic Republic of Timor-Leste (formally East Timor) Mari Alkatiri last month signed agreements that have put in place the legal framework and production sharing agreements required by oil companies to operate with certainty in the disputed waters.

The signing coincided with the release of three large tracts of acreage within the Joint Petroleum Development Area -- formally known as the Timor Gap -- and encompassing the disputed zone. Each of the blocks is adjacent to previous significant discoveries, including Sunrise, Bayu-Undan liquefied natural gas project and the Laminaria/Corallina oil discoveries.

Bayu-Undan, operated by US-based ConocoPhillips and in which Australian-owned Santos Ltd has a 10 per cent share, operates under its own negotiated agreements with the Australian and Timor-Leste governments but like all of the zone, 90 per cent of royalties go to the Timor-Leste Government.

Prior to East Timor's independence, the disputed water was under an agreement with the occupying forces of Indonesia that had been signed in 1976, but the dispute goes back to 1953 when negotiations started (never reaching a conclusion) with Portugal, the occupying colonial power.

The treaty with Indonesia was always disputed as illegal by East Timor. Renegotiating the royalty split of the disputed area was the first priority of the new Timor-Leste Government, and after some bitter negotiations, the Australian Government finally reduced its take from the zone and agreed in May 2002 to grant one of the world's newest and most impoverished nations the lion's share.

Both governments remain eager for the Timor Sea to become a significant new hydrocarbon province, and the new releases and exploration and production agreements provide an avenue for that to occur.

Macfarlane told The Australian: ''One of the greatest advantages of doing business in Australia is certainty of the political, economic and legal environment in which companies are expected to operate. I would expect the industry will derive significant comfort, even courage, from the agreement of these documents. They deliver certainty for planned or future exploration and development plans in the area.

''From an investor's perspective, sovereign and legal risk has now been nullified when it comes to considering investment in the Timor Sea, with the legal and fiscal terms of exploration and development within the JPDA now clearly defined.

''Already significant investment has been made in the joint area, and I would expect that to continue given the amounts of proven reserves identified in, and close to, the region.''

The acreage release is being managed by the Timor Sea Designated Authority (TSDA), a jointly operated entity between the Australian and Timor-Leste governments. TSDA spokesperson Niny Borges said interest in the exploration blocks up for grabs was strong. Interested parties have until May 26 to register exploration plans. Both Woodside and ConocoPhillips are expected to bid on one or more of the exploration blocks.

There are also significant areas outside the disputed waters, and clearly inside Australian waters, that have the potential for new developments. These include the Tern, Petrel, Evans Shoals, Blacktip and recent Caldita gas discoveries.

Santos is eager to make the Timor Sea a core business unit for the group and its managing director, John Ellice-Flint, said: ''The company's main focus is to prove up sufficient reserves to justify the construction of a second LNG train at the newly commissioned Bayu-Undan facilities in Darwin.

''Late last year, Santos and ConocoPhillips were awarded permit NT/P69, which is adjacent to the Caldita discovery, and contains the previously discovered Lynedoch gas resource, which has now been renamed Barossa. Santos is working closely with its partners to optimise further exploration and appraisal wells in the area. Proposed activities planned for 2006 include a large 3D seismic survey covering up to 8,000 square kilometres and designed to take in the Caldita, Barossa and Evans Shoal fields.''

Various types of exploration and appraisal wells are also planned for Caldita, Barossa and Evans Shoal.

New entrants like AED Ltd and Goldsborough Pty Ltd are also eager to get production started in the Timor Sea.

But despite the move on several fronts to finally make the Timor Sea an attractive place to invest, there is still the dark cloud known as Sunrise hanging over the region.

Sunrise is project-managed by Woodside Petroleum but the 90-strong team that was working towards a development plan a few years ago has been disbanded as an agreement to allow the LNG project to proceed failed to materialise. Sunrise is not covered under the new agreements.

Sunrise contains in excess of 5 trillion cubic feet of gas (tcf) and has been earmarked as a future LNG development. The major sticking point is Timor-Leste's insistence that production facilities be built on its soil.

A pipeline to Timor would have to cross a 2km deep and geologically unstable trough. While the technicians say it is not impossible, it is a far riskier and more costly option to placing the facilities at Darwin. Darwin also has a growing base of secondary industries to service such a facility, and the stable political environment is an attraction.

However, given the ability of the governments to negotiate solutions in recent years to the problems that face development in the Timor Sea, an agreement on Sunrise may be on the horizon.

Macfarlane said: ''Last month's exploration and production agreements were agreed by both governments in recognition of the fact companies require this certainty before they can even begin to weigh the commercial considerations of investing in the JPDA.

''Given the successful negotiation of these operational instruments, Australia looks to East Timor to soon ratify the 2003 Greater Sunrise International Unitisation Agreement and progress ratification of the recently signed Treaty on Certain Maritime Arrangements in the Timor Sea to enable the Greater Sunrise project to proceed''.

Interview - E.Timor PM says confident gas pact will get OK

By Jerry Norton, Reuters
August 18, 2006

DILI, An agreement critical to advancing development of the Timor Sea's biggest gas resource could go to East Timor's parliament in September or October, and would likely be approved, the country's prime minister said.

Oil and gas producers have said they are waiting for the deal to be ratified before committing to development of the Greater Sunrise area, estimated to hold 8 trillion cubic feet of gas and up to 300 million barrels of condensate.

"I am confident it will be approved," East Timor Prime Minister Jose Ramos-Horta told Reuters in an interview on Friday, but he added he wasn't sure whether the agreement would go to parliament, now in recess, in September or October.

About 20 percent of Greater Sunrise lies in a Joint Petroleum Production Area (JPDA) between Australia and East Timor and the rest in what Australia calls its exclusive jurisdiction.

Under the JPDA 90 percent of royalty revenues go to East Timor and 10 percent to Australia, while the new agreement would share remaining revenues 50-50, potentially delivering up to $14.5 billion to impoverished East Timor over 20 years.

Australia has been putting off its own ratification waiting for East Timor to act first.

Greater Sunrise operator Woodside Petroleum Ltd froze the $5 billion project in 2004 while waiting for Canberra and Dili to iron out their differences.

Another sticking point has been whether to build a liquefied natural gas processing plant for Greater Sunrise in East Timor and a pipeline to feed it the field's production, or to send it to a plant being built in northern Australia.

"The remaining issue to be resolved is the direction of the pipeline, where the pipeline goes, to Darwin or to Timor," said Ramos-Horta.

"We believe it makes more economic sense, commercial sense, that it comes to East Timor, but we don't deal with it in a dogmatic, Biblical manner," he said.

"If we are persuaded through an independent study... that it makes more sense to go to Australia, then (so) be it, but we would then want some downstream compensation because of the loss of additional revenues that we know would come to our side if the pipeline were to come to East Timor."

Ramos-Horta said he hoped the study could be finished by the end of the year.

In addition to Woodside, Greater Sunrise's stakeholders include ConocoPhillips , Royal Dutch/Shell and Japan's Osaka Gas Co. Ltd. .
Woodside is 34 percent-owned by Shell.

Ramos-Horta also said he was receiving next week "a significant delegation from the Middle East, from the Gulf countries, from Kuwait, from India to negotiate with them serious investment in infrastructure," including, among various projects, an "oil refinery to refine oil and export to Australia, Indonesia and so on".

The prime minister said he had just given the green light to an East Timorese company to build new oil storage facilities in the country which in nine months would have a capacity of up to 10,000 tonnes, "which is far more than the current oil storage facility we have with far better price".

Indonesia's state-owned Pertamina supplies the existing facility, while the new one would deal with Malaysia's Petronas, Ramos-Horta added.

Timor election may delay Sunrise

By Nigel Wilson, The Australian
November 23, 2006

WOODSIDE'S Greater Sunrise gas project in the Timor Sea may not be ratified before East Timor's elections in May.

There was a flurry of interest in the stalled project earlier this month when East Timor's Prime Minister, Jose Ramos Horta, said he would ask the country's parliament to ratify treaties with Australia splitting royalties from the Sunrise and Troubadour reservoirs about 80km off the Timor Coast.

Woodside requires legal, fiscal and regulatory certainty before resuming work on a plan -- costed in 2004 at more than $6 billion -- to commercialise about 8 trillion cubic feet of gas and 300 million barrels of condensate the reservoirs are estimated to contain.

"The Government is going to send to parliament for debate and ratification, the treaty on Certain Maritime Arrangements in the Timor Sea (CMATS) and the International Unitisation Agreement (IUA)," Ramos Horta told parliament.

"Honoured elected representatives of the nation will understand that this treaty serves the best interests of our country and once ratified will allow the development of Greater Sunrise, the resources of which will guarantee economic independence and national prosperity."

A senior Woodside executive who travelled to East Timor after Ramos Horta's speech -- marking his first 100 days in office -- was optimistic that early ratification of the two treaties was likely. But sources in both East Timor and Canberra seem unconvinced that the speech is a major step forward in establishing a ratification timetable.

in January Mr Ramos Horta and Australian Foreign Minister Alexander Downer signed CMATS at a ceremony that was supposed to reignite the push for ratification and ultimately development of an LNG project on Sunrise. Former prime minister Mari Alkatiri's supporters in Fretilin, which has a majority in the Dili parliament, argued that the original IUA covering Sunrise -- which split government revenues 79.1 per cent to Australia and 19.9 to East Timor -- was unfair because of the vast wealth it would bring Woodside and its partners, ConocoPhillips, Shell and Osaka Gas.

At the time the Department of Foreign Affairs and Trade said CMATS and the IUA "establishes a framework for the exploitation of the Greater Sunrise gas and oil resources and will see the equal sharing of upstream Government revenues flowing from the project".

Some Fretilin members and independents in the Dili Parliament remain unconvinced the revised deal under CMATS is in East Timor's interests. There is also a suggestion that East Timor wants any LNG development to be located within its borders, which Woodside maintains is uneconomic.

Last week in Sydney, Woodside chief executive Don Voelte said he hoped to announce progress on Sunrise early in the new year.

Sunrise featured in Woodside's latest investor briefing, which implied that initial development at Sunrise might be concentrated on extracting condensates, rather than moving immediately to an LNG development.

In Dili this week Government sources refused to discuss a schedule for ratification, saying the agreements would have to take their place among other important pieces of legislation.

The Dili Parliament is debating a new electoral law which is necessary before the country goes to the polls in an election campaign expected to begin in February.

It is unlikely that ratification would be pursued after campaigning began.

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
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