Speaking to ABC Radio, Ramos-Horta warned that if Prime Minister John Howard did not intervene in the negotiation process to help resolve the issue, Timor Leste would seek help from the International Court of Justice or the United Nations General Assembly.
Australia and Timor Leste cannot agree on where the boundary between the two nations should lie and how the gas revenue should be split. Dili asserts that it should be the mid-point between the two nation’s coastlines, but Canberra insists the continental shelf should define the boundary and refuses international arbitration on the matter.
“[Australia] knows too well that its continental shelf claims are not credible and sustainable in international law," Ramos-Horta said earlier in an address at the Lowy Institute in Sydney.
Ramos-Horta said that while Australia had withdrawn from the jurisdiction of the International Court of Justice it could not prevent the UN General Assembly from requesting a non-binding advisory opinion on the Timor Sea.
He said if Australia did not accept the judgment, oil companies would be reluctant to invest in the Timor Sea and the development of the Northern Territory would be set back.
"Australia's interest would be undermined," Mr Ramos Horta said.
"It would be very damaging to our relationship, it would be very damaging to Australia's international credibility. It would be seen as such a rich powerful country bullying one of the poorest countries in the world."
Ramos-Horta said Australian officials had attempted blackmail during recent negotiations over the new nation's maritime boundaries.
He claimed Australia changed its negotiating position after the federal election, offering $1.5 billion less compensation than it had originally put on the table.
Ramos-Horta said Australia’s chief negotiator, Department of Foreign Affairs and Trade deputy secretary Doug Chester had abruptly ended talks. Chester allegedly told the East Timorese they could “take or leave” Australia's offer of a $3 billion compensation payment for accepting Australia's preferred boundary, reneging on a previous offer of $4.5 billion.
These remarks "amounted to an unacceptable blackmail", Ramos-Horta said.
A spokesman for Australian foreign minister Alexander Downer told ABC Radio that Australia had not changed its position and that the East Timorese had rejected several "constructive solutions".
This impasse puts the future of the Greater Sunrise gas field at risk. Woodside Petroleum has repeatedly said that if an agreement cannot be reached by the end of this year the company would be unable to invest any more money in the project.
Dili also wants the gas in the disputed area to be processed in East Timor rather than the Northern Territory, saying it would provide an important opportunity for the long-term sustainable development of the country's economy.
Mr Downer's spokesman said Mr Ramos-Horta and the Foreign Minister would both be in South Australia later this week for the South West Pacific Dialogue and would probably resume discussions about the Timor Sea fields on Friday.
