“This is a good agreement for Timor-Leste but it is also a good agreement for Australia,” Alkatiri said.

“Timor-Leste has not compromised its legal claim and legal position in respect of the question of maritime boundaries. This agreement takes account of the essential interests of both Timor-Leste and Australia,” he said.

Under the Timor Sea Treaty, petroleum development is already underway in the Bayu-Undan field. But the revenue sharing agreements will change.

In 1999, the agreement with Australia awarded Timor-Leste 50 per cent of the revenues of an area that was the same as the Joint Petroleum Development Area (JPDA), including some 10% of the Greater Sunrise area.

“Today, we receive 90% of the revenues of the JPDA, and with this new agreement, we will receive a total of 50% of the Greater Sunrise”, he said.

Alkatiri said this solution was the best outcome for East Timor as a court case would have been difficult.

“First, these agreements with Australia offer certainty of result, and no one can affirm that the result of the court case would be better,” he said.

“Second, a court case would take years to finish – in the meantime there would be little that Timor-Leste could do to protect the resources.”

“The instability that would exist for years could seriously damage the investment perspectives, thus potentially compromising the social-economic development of Timor-Leste.”

Alkatiri said that this deal would also put into place a framework that allows a second major petroleum development in this area – Greater Sunrise.

This was crucial in terms of planning around government revenues from the petroleum sector. At the moment, East Timor depends almost exclusively on only Bayu-Undan. Under this deal, it is expected that the Greater Sunrise will go ahead and start producing about halfway through the production cycle of Bayu-Undan, according to Alkatiri.

“The long-term, steady inflow of revenues into our Petroleum Fund will offer conditions for long-term planning and investment, as we strive for the sustainable development of our country. That is our key goal”, he said.

“This agreement also opens the way for the construction of a pipeline between Greater Sunrise and Timor-Leste and for the installation of a refining facility that will be the start of petroleum activities on Timorese soil.”

But this appears to be wishful thinking. Unless East Timor can offer huge sweeteners to the Sunrise partners, they 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.