Smith seeks Timor peace on oil and gas – CLIMATE CHALLENGE

December 11, 2007

Nigel Wilson, Energy writer

STEPHEN Smith will attempt to ease tensions between Australia and East Timor during his first overseas trip as Foreign Minister this week.

High on his agenda will be the issue of energy resources following the hardening of Dili’s attitudes since the election of a new East Timorese Government earlier this year.

Mr Smith is scheduled to travel to Dili following the climate-change summit in Bali this week.

Australian officials say they do not believe Dili will renege on the energy agreement signed in Sydney in January by then foreign minister Jose Ramos Horta, who is now the country’s President, but the East Timorese are increasing irked by sharing administrative responsibility for the Timor Sea oil and gas reserves.

The two countries share equally the responsibility for the joint petroleum development area between Darwin and East Timor’s south coast.

Under treaties with Australia, East Timor receives 90 per cent of the revenues from developments in the Timor Sea.

The 90 per cent revenue sharing arrangement came on condition of East Timor putting on hold for 50 years the determination of a maritime boundary between the two countries.

Many senior East Timor officials believe their country has the right to the oil and gas reserves in the Timor Sea, rather than Australia, and that Dili should not have signed away its maritime boundary position.

The equal sharing of administrative responsibility means decisions must be made by consensus.

Australia’s biggest investment in the Timor Sea is the $US3billion ($3.4 billion) Bayu Undan oil and gas development operated by ConocoPhillips, which supplies gas to the export liquefied natural gas plant in Darwin.

The Dili Government also hopes to have an LNG facility using Greater Sunrise gas reserves sited in East Timor.

Woodside Petroleum, the Greater Sunrise operator, said last month it favoured a floating LNG plant for Greater Sunrise.

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