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E. Timor energy deal finally sealed
By CNN's Grant Holloway in Sydney
DILI, East Timor (CNN) -- Negotiations to seal a $30 billion (Aust. $50 billion) energy resources deal between Australia and East Timor are finally to be completed, amid accusations of blackmail and acrimony. After months of standoff, Australia's Foreign Minister Alexander Downer is due to sign a key agreement in Dili, East Timor, on Thursday, paving the way for the development of at least two major gas and petroleum projects. The negotiations have been marred by disputes over maritime boundaries and the distribution of royalties from the gas fields of the Timor Sea which separates Australia and the fledgling nation of East Timor -- a former province of Indonesia. The agreement to be signed Thursday concerns the Greater Sunrise field which Australia claims falls 80 percent within its territory and from which East Timor will receive 18 percent of the revenue. Greater Sunrise, which lies 150 kilometers (93 miles) from East Timor, is estimated to contain 8.35 trillion cubic feet of gas. East Timor is unhappy with this boundary deal but is believed to have agreed to sign under pressure from the Australian government which was stalling another deal vital to Dili's economic future: the Timor Sea treaty. Under that deal, East Timor will earn 90 percent of the royalties from the Joint Petroleum Development area -- which includes the massive Bayu Undan liquefied natural gas project. East Timor is predicted to earn revenues of Aust. $5.5 billion ($3.5 billion) over the next 20 to 30 years from the project, income which is considered vital to the economic and political development of the new nation. Legislation to ratify that treaty was introduced to Australian parliament on Thursday, just days ahead of a commercial deadline for the supply of gas from the project to Japanese buyers. Energy giant ConocoPhillips needed the treaty to be ratified by March 11 under a supply deal it had struck with Tokyo Electric Power Co. and Tokyo Gas for the delivery of 3 million tonnes of LNG from 2006.
Minister Downer, however, denied Thursday that undue pressure had been brought to bear on the East Timorese to sign the Sunrise deal although he admitted that at times discussion between the two nations had been "lively". Speaking to media in Canberra before departing for Dili, Downer said the two nations had now concluded all the significant phases of the negotiations. "This will provide Australia and East Timor with a A$50 billion oil and gas field," he said. "This is going to give East Timor a foundation for economic development that it otherwise wouldn't have". Downer dismissed suggestions relations between East Timor and Australia had been damaged by the energy negotiations, saying that there was a lot at stake and striking deals of this sort often went down to the wire. But the Timor Sea Office -- the negotiating office for East Timor Prime Minister Mari Alkatiri on gas and petroleum issues -- told an Australian newspaper that Australia had applied significant diplomatic pressure on East Timor to sign off on the Sunrise agreement. 'Blackmail'Australian opposition politicians said Thursday the government had allowed relations between the two nations to deteriorate alarmingly. "The tragedy for Australia is that our diplomatic relationship with East Timor right now is in a sorry state," Labor foreign affairs spokesman Kevin Rudd said. "The foreign minister's personal relationship with the prime minister of East Timor is at an appalling low." Greens Senate leader Bob Brown accused the government of "blackmailing" East Timor into signing the Sunrise agreement. East Timor's oil income last year was projected to be $20 million, or 5.3 percent of the country's GDP of $371 million. That projection rises to $36 million in 2003, $78 million in 2004 and then $103 million each in 2005 and 2006, by which time it will account for 25 percent of GDP. Most of that is expected to come from the Bayu Undan field.
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