Rick Wilkinson
OGJ Correspondent
MELBOURNE, Dec. 5 -- The governments of Australia and East Timor have finally agreed to a division of the royalties from oil and natural gas resources in the Timor Sea.
The eighth round of talks between the two countries since April 2004 concluded at the start of this month with an initialed agreement and an exchange of letters on the basis of an agreed text.
Neither government would reveal full details, but Australia's Foreign Minister Alexander Downer said the arrangements under the 2002 Timor Sea Treaty will remain in place.
"East Timor will continue to get its 90% share of revenues from the production of the joint development area," Downer said.
In May the countries agreed to split the royalties from the proposed development of Woodside Petroleum Ltd.'s Greater Sunrise field, which straddles the boundary between the joint development zone and Australian waters, rather than the 82:18 split in favor of Australia proposed earlier (OGJ Online, May 17, 2005). In return, East Timor agreed to postpone discussion of the disputed maritime boundary for 50 years.
However, Woodside is unlikely to move towards field development in the short term. The company is concentrating on the development of Pluto gas field and Browse basin discoveries like Scott Reef and Brecknock on the North West Shelf off Western Australia.
Woodside said the future of Sunrise depends on a number of factors, including the fiscal regime under which it would operate, the cost and location of any development, and the successful marketing of the gas.
Details of the new Timor Sea Agreement will not be released until the document is formally signed in January 2006.