Mr Grazia said it is crucial the project is not affected by the royalty arrangements of the governments.

"Governments can redirect the returns as they see fit, but it's absolutely imperative for investors that the project economics are protected from any flow-on effect of those changes," he said.

If such guarantees are not made, the Sunrise development will not go ahead, he warned.

"The only thing I am confident about is that there will be no investment if the parties are exposed to those sorts of risks and therefore there will be no return and no benefit to either country."

East Timorese leaders have indicated they want a greater share of the lucrative Greater Sunrise field and would use all available instruments and international mechanisms to get it.

The Greater Sunrise field lies mostly outside the Joint Petroleum Development Area covered by the new Timor Sea Treaty, which gave the East Timorese authorities 90% of the royalties from gas taken from the area.

With only 20% of Greater Sunrise field in the area, East Timor will get only 18% of revenues, with Australia taking the rest. However the East Timorese have said it has legal advice that suggests that the entire area could be within its maritime boundary.

East Timorese Foreign Minister Jose Ramos-Horta said yesterday he believed Australia will concede a bigger slice of the fields, which contain about 9 trillion cubic feet of natural gas.

Woodside owns a 33.44 per cent stake in the Sunrise project along with Phillips Petroleum (30%), Royal Dutch/Shell (26.56%) and Osaka Gas (10%).