Doing business with East Timor

The Treaty and related documents – which consist of an Exchange of Notes on provisional arrangements until entry into force of the Treaty and a Memorandum of Understanding on an International Unitisation Agreement for the Greater Sunrise field – will open the way for major oil and gas developments in the Timor Sea.

These developments will underpin the economic future of an independent East Timor. The agreements will provide the necessary legal and commercial certainty for companies to exploit the tremendous resource potential of the Timor Sea, to the benefit of both East Timor and Australia.

The treaty establishes a comprehensive regulatory framework covering all the matters you would expect to see, ranging from development and production to health and safety of workers to the application of taxation and criminal law.

I want to stress that the negotiations which led to the Treaty, although tough at times, were conducted in a spirit of cooperation and goodwill which augurs well for the future of our bilateral relationship.

It is a fair treaty, under which 90 percent of the revenue from petroleum production will flow to East Timor. In agreeing to that formula, Australia was conscious of the need for East Timor to have a sound economic base.

The revenue derived from the agreements will underpin East Timor's viability as a national economy. We look forward to early implementation of all aspects of the Treaty, including our joint commitment to early conclusion of a unitisation agreement for the Greater Sunrise field.

Early stage development of the Bayu-Undan field has already commenced. This field will be able to provide East Timor with substantial revenues from as early as 2003. The gas will be processed onshore in Darwin for export, providing substantial downstream benefits for Australia.

Australia and East Timor have agreed to proceed expeditiously with the action in each country that is necessary to bring the Treaty into force. In the meantime, the Exchange of Notes continues the arrangements for the Timor Sea that were in place on 19 May this year. Upon entry into force, the Treaty will be applied retrospectively to 20 May 2002.

Australia is determined that the Timor Sea should be a unifying factor between our two nations. The outcome we have achieved makes practical good sense, in both political and economic terms.

It is also a blueprint for very close cooperation between Australia and East Timor, binding us to work together, as equals, for our mutual benefit over the longer term. Thus, it will be a cornerstone for the development of a strong and deep bilateral relationship.

East Timor’s economic development

Increasingly, trade and economic development will be an important focus in Australia’s relationship with East Timor.

There is no doubt that East Timor faces significant economic challenges. In 2001, GDP per capita was US$478, and more than 40 percent of the population lives below a poverty line set at 55 US cents a day. Literacy is around 40 percent, and life expectancy is 57 years.