Last Thursday, Alkatiri and Australian prime minister John Howard witnessed a signing ceremony that concluded long-running negotiations between the two countries on how to share resource, estimated to be worth up to $41 billion. The deal will ensure a 50-50 royalty split between the two countries.
But the deal has yet to be ratified by East Timor's parliament, Woodside is committed to developing a Browse Basin LNG hub in the next few years, and disagreement is persisting on where an LNG plant would be located. So 10 years looks more like being the deadline for front-end engineering and design rather than production.
Under a previous arrangement, Australia was to receive 82% of royalties, compared with only 18% to East Timor.
Woodside put the Greater Sunrise project on hold at the end of 2004, due to the uncertainty created through the prolonged negotiations.
Despite the governments' pact, Woodside has not indicated when the development would go ahead.
Woodside has said there were several stages to work through before the joint venture partners would decide whether to go ahead with the project.
The deal has yet to be ratified by both parliaments. East Timorese president Xanana Gusmao and Timorese opposition parties have expressed concerns over the deal, so its passage is by no means certain.
Projected to be a A$6.63 billion development, Greater Sunrise is estimated to contain about eight trillion cubic feet of gas and about 300 million barrels of condensate.
Dili still wants any LNG plant to be located on East Timorese soil.
But unless East Timor can offer huge sweeteners to the Sunrise partners, Woodside and its partners are almost certain to direct the Sunrise pipeline to Darwin.
By the time Sunrise is being developed, Darwin will be a major petroleum and LNG hub, and it will be much easier to recruit skilled personnel to work in Darwin than in Dili. In addition, the Timor Trench – a 3000 metre-deep rift – lies between Sunrise and East Timor, making any pipeline a logistical nightmare.
Dr Alkatiri said the new agreement with Australia would provide a major boost to East Timor’s revenues, while also protecting its territorial sovereignty.
But talks on a maritime boundary between East Timor and Australia have been shelved for the next 50 years, to allow the oil and gas schemes to proceed.
