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Australia Settles Oil, Gas Dispute with East Timor

Australia has settled a long-running dispute with East Timor over oil and gas revenue worth billions of dollars. The agreement guarantees the East Timorese a multi-billion dollar cut of proceeds from exploration in the Timor Sea. In return, the East Timorese government has agreed to suspend talks on finalizing the maritime boundary between the two countries.

Indonesian Coordinating Minister for Economic Affairs Aburizal Bakrie, center, looks on as Indonesian Foreign Minister Hassan Wirajuda, left, shakes hands with Australian Foreign Affairs Minister, Alexander Downer
Australia's Foreign Minister Alexander Downer said that under Friday's agreement, East Timor would be eligible for payments of up to $4 billion from future oil and gas exploration.

On top of that, it would also receive 90 percent of the revenues it currently receives from an existing joint oil and gas development area in the Timor Sea.

Mr. Downer insisted it was a good result for the East Timorese. Earlier this week, he denied his government was trying to cheat Australia's poor northern neighbor out of desperately needed cash.

Speaking after three days of negotiations in the Timorese capital of Dili, Mr. Downer said he expected a final agreement to be drawn up within weeks.

"There has been substantial agreement on all major issues, and officials will work towards finalizing the details in the lead-up to a further round of talks, which is scheduled very soon, for the 11th of May in Brisbane," he announced.

As part of the deal, the Timorese have agreed to postpone sensitive negotiations with Australia on a shared maritime boundary.

East Timor was adamant the line had to be drawn in the middle of the 600 kilometers of sea that separate the two countries. Australian officials wanted to stick with the same frontier they had negotiated in 1972 with Indonesia, then East Timor's ruler.

Friday's agreement allows the two parties to side-step that stalemate, which was holding up the development of a potentially lucrative new field.

East Timor's independence in 2002 was accompanied by widespread violence as Jakarta-backed militias went on the rampage.

The country is still unstable. The U.N. Security Council voted Thursday to keep a small presence in the country for another year, after Secretary-General Kofi Annan warned a quicker pullout could undermine stability.

That general sense of unease has also influenced Australia's decision to allow more than 1400 East Timorese refugees to remain in the country on humanitarian grounds.

Many have been living in Australia since fleeing East Timor before it gained independence from Indonesia. However, the authorities in Canberra are planning to deport another 50 East Timorese. Officials have insisted they have "no compelling case to remain" in Australia.