Talks resume in Timor Sea revenue-sharing

Australia and East Timor resumed negotiations here yesterday aimed at clearing the way for a July agreement on splitting petroleum revenues from a disputed oil and gas area of the Timor Sea.

A spokesman for Australia's Foreign Minister Alexander Downer said the talks involving East Timor representatives, Australian officials and oil companies with interests in the Timor Sea would remain behind closed doors over two days.

"We are still on track to sign off on a framework agreement some time in July," the spokesman told Reuters. He said no date was yet set for a formal announcement. Officials said good progress was made at the last round of negotiations in Dili in late May.

Petroleum companies want clarity as soon as possible on fiscal and regulatory terms for multi-billion dollar developments of the vast Bayu-Undan and Greater Sunrise fields, which contain some 12 trillion cubic feet of gas.

Bayu-Undan operator Phillips Petroleum Corp and Greater Sunrise operator Woodside Petroleum Ltd earlier this year signed an agreement to cooperatively develop the fields.

Peter Galbraith, a cabinet member of East Timor's transitional government, said in April that a deal was needed by July 15 due to the timeline toward East Timor gaining independence later this year.

Oil revenues from the disputed Timor Gap area were split equally between Indonesia and Australia under a treaty that has been void since East Timor's vote for independence from Indonesia in August 1999.

A new treaty is expected to give 85 per cent of those revenues to East Timor, which says it should be entitled to 100 per cent of revenues, given the location of the fields. Gas from the offshore fields is planned to be brought ashore at Darwin by a US$500 million pipeline, which Phillips hopes to commit to by the end of July.

The original treaty with Indonesia neglected gas issues as the Timor Sea was regarded as mainly a potential oil province. Petroleum producers hope in July-August to sign contracts to supply liquefied natural gas to El Paso Corp in the U.S. from 2005 and to supply gas to Methanex Corp