Dear Colleagues,

According to news in the press, Australia and UNTAET (acting on behalf of
East Timor) have finalised an arrangement on the petroleum resources in the
Timor Sea, which will cover apparently the same area as the so-called Timor
Gap treaty. The signing of this arrangement will take place this week in
Dili, the East Timorese capital. The terms of the arrangement are to be
incorporated into a new treaty upon East Timor's independence, replacing the
existing provisional agreement between Australia and the United Nations.
This arrangement is seen as the starting point of good co-operation between
East Timor and Australia at all levels, and it is the first instance in
which the United Nations has participated in negotiating a treaty on behalf
of a country.

These are some of the details of the treaty, which is expected to have an
initial duration of 30 years. The dispute over the seabed boundary between
the two nations has been deferred, without prejudice of either party's
rights. In terms of revenue, there will be a 90:10 split, East Timor :
Australia, of what is expected to become multi-billion dollar development in
the next 20 years. Australia will have very substantial downstream benefits
as a result of projects in the Northern Territory, where a pipeline from the
gas fields in the area is supposed to land. This arrangement is expected to
allow companies to plan the major oil and gas developments in the area with
the certainty they require to proceed with those investments. The Greater
Sunrise gas field, which straddles the area of the arrangement, is to be
unitised on the basis that 20% of the field lies with the development area
and 80% lies within Australian jurisdiction. Australia will have
jurisdiction over the planned pipeline from the area to Australia. Other
details of the arrangement include the maintenance of the contractual terms
of the Bayu-Undan, Greater Sunrise and Elang-Kakatua projects.

Regards,
Nuno Antunes

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