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Media Coverage - 17 January 2005 >> 

Australia invites E.Timor to new round of gas talks

MELBOURNE, Jan 17 (Reuters) - Australia has invited East Timor to resume talks on splitting billions of dollars of oil and gas revenues in the Timor Sea after discussions collapsed late last year and stalled the $5 billion Greater Sunrise project.

"We are proposing that the talks be held in the first-quarter of 2005 and are now waiting for a response from East Timor to set an exact date," Julie McDonald, a spokeswoman for the Department of Foreign Affairs and Trade, said on Monday.

A spokesman for East Timor Prime Minister Mari Alkatiri said East Timor was willing to return to the negotiating table and explore all options to find a "creative solution".

East Timor estimates the total value of known oil and gas reserves in the disputed area of the Timor Sea at more than $30 billion. The biggest single resource in those waters is the Greater Sunrise field with its reserves estimated at $22 billion to $25 billion.

Disagreement over how royalties from Timor Sea projects should be split has stalled the Woodside Petroleum Ltd. -operated Greater Sunrise project and the company said on Monday it had started re-assigning the field's 20 workers to other projects.

Perth-based Woodside had given both sides until Christmas to resolve their differences, which primarily centre on where the maritime boundary should be.

While neither government agreed on revenue splitting when they last met in October, they did agree to meet twice a year.

East Timor, which voted to break away from Indonesian rule in 1999 and remains largely dependent on foreign aid, says the border in the sea should be drawn at the midpoint between the two countries.

Australia believes the boundary should be defined by the continental shelf, which in some places lies less than 80 km (50 miles) from East Timor's southern coastline.

Woodside has a 33.4 percent stake in Greater Sunrise, ConocoPhillips has 30 percent, Royal Dutch/Shell 26.56 percent while the balance is held by Japan's Osaka Gas Co. Ltd. .

Woodside, 34 percent owned by Shell, said the joint venture had so far spent about $160 million on the project which was originally slated to deliver its first liquefied natural gas (LNG) by 2010.

Australian Energy Minister Ian Macfarlane said on Thursday he would not be promoting Greater Sunrise gas as a potential supply source for the U.S. West Coast during a trip there this week to push Australian LNG.

Australia is seeking to secure one-third of the California gas market by 2025 by exporting to proposed offshore terminals in the United States and Mexico in sales worth A$50 billion ($38 billion), Macfarlane said.

Woodside shares closed up 1.8 percent at A$21.37 in a firmer overall market. ($1=A$1.32)