East Timor and Australia break off talks on sea boundary

Oct 28, 2004 02:00 AM

Talks on the sea boundary between Australia and East Timor have broken down only two-and-a-half months after both sides promised to have a deal in place by Christmas so a multibillion-dollar gas project could go ahead.
The negotiations in Dili, the East Timorese capital, were suspended after the two sides reached an impasse over how to share royalties from gas fields including Woodside Petroleum's $ 3.7 bn Greater Sunrise. Officials on both sides said no further talks were scheduled.

East Timor agreed in August to stop pursuing a permanent boundary between the two countries in exchange for a greater share of revenues from the Greater Sunrise gas field and others in the Timor Sea. However, Mari Alkatiri, the prime minister, said talks to flesh out that agreement had ended unsuccessfully.
"We put forward a range of options. [But] what the Australian government delegation was willing to offer and explore did not come even close to recognising our sovereign rights," he said.

According to officials on both sides, Australia offered to pay about $ 3 bn to East Timor in exchange for the small country giving up its right to pursue a permanent sea boundary for at least 100 years. East Timorese advisers rejected that, saying it undervalued royalties they claim to be owed and would have shut the door on royalties from future projects. Australian officials blamed East Timor for the breakdown as its negotiators had "changed their position dramatically".
"It is up to them whether they want to talk," said Doug Chester, Australia's lead negotiator. The discussions "broke down because we had reached a point where there were no more creative ideas, because everything we suggested they rejected, including their own ideas".

The existing boundary, which put many of the known oil and gas fields in Australian waters, was negotiated in 1972 before Indonesia's 1975 invasion of the then Portuguese colony and was seen by many as the main reason Australia never objected formally to the invasion.
East Timorese officials argue that a commonly accepted line halfway between the two countries would entitle them to many times what Canberra has offered. Total tax revenues from the Greater Sunrise field alone are now estimated at $ 15 bn over its life, they say, and Dili is justified in claiming at least 80 %, if not all, of that.

Source: Enatres
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