Fledgling East Timor Signs Oil And Gas Treaty With Australia

The newly independent East Timor has signed a treaty with Australia on the division of some Timor Sea oil and gas revenues, sealing an agreement that gives the impoverished nation a lifeline to economic self sufficiency.

However the Prime Minister Mari Alkatiri stressed that negotiations about a maritime boundary would continue in an effort to secure a larger share for East Timor of a vast oil and natural gas field known as Greater Sunrise.

Mr Alkatiri and his Australian counterpart John Howard signed the treaty in the headquarters of the newly inaugurated government, just hours after Mr Alkatiri and the new cabinet were sworn in.

The Timor Sea Treaty awards East Timor ninety percent of the profits from oil and gas developments in a designated joint production area, guaranteeing Asia's poorest nation up to five billion dollars in earnings over the next seventeen years.

Only about twenty percent of Greater Sunrise falls within the joint production area and eighty percent lies in Australia's area so East Timor would receive only eighteen percent of royalties from the field's entire future output.

Taxes from oil and gas projects are already trickling in, and are expected to cover most of East Timor's government expenditure by 2005-2006, according to budget projections, giving the new country its first glimmer of self-sufficiency.