THE HAGUE: Australia and Timor-Leste have reached a breakthrough agreement on their maritime border, ending a decade-old dispute that has stalled a US$40 billion offshore gas project.
The Permanent Court of Arbitration in The Hague announced on Saturday that the countries had reached an agreement "on the central elements of a maritime boundary delimitation between them in the Timor Sea" -– but that details would remain confidential until the deal was finalised.
Arbitration began last year and the talks, hosted by Denmark, resulted in a deal on Aug 30.
The countries agreed to establish a special regime for the Greater Sunrise field, paving the way for its development and the sharing of the resulting revenue, the court said in a statement.
The chief negotiator for Timor-Leste, former president Xanana Gusmao, hailed the agreement as a historic moment that would mark the beginning of "a new era in Timor-Leste's friendship with Australia".
"I thank the commission for its resolve and skill in bringing the parties together, through a long and at times difficult process, to help us achieve our dream of full sovereignty and to finally settle our maritime boundaries with Australia," Gusmao said.
The former Portuguese colony known as East Timor has struggled to develop as an independent nation since a violent break from occupying forces from Indonesia in 1999. Gas reserves, once claimed by Australia, are a key to its economic future.
The long-running political dispute has led the owners of the Greater Sunrise fields -- Woodside Petroleum, ConocoPhillips, Royal Dutch Shell and Japan's Osaka Gas -- to shelve the project.
The fields are estimated to hold 5.1 trillion cubic feet of gas and 226 million barrels of condensate, which analysts have estimated could be worth $40 billion.
The existing maritime boundary is aligned with Australia's continental shelf, but Timor-Leste has long argued the border should lie half way between it and Australia -- placing much of the Greater Sunrise fields under its control.
Australia had previously resisted renegotiating a permanent border but under pressure from the United Nations has agreed to enter talks with Timor-Leste.
Australian Foreign Minister Julie Bishop said the agreement was a "landmark day" in the relationship between Timor-Leste and Australia.
"This agreement, which supports the national interest of both our nations, further strengthens the long-standing and deep ties between our governments and our people," she said.
Australia earlier this year agreed to allow Timor-Leste to terminate an oil revenue-sharing treaty between the two countries, while earlier treaties that govern production remain in place.
Timor-Leste withdrew legal proceedings it launched over the past few years against Australia in order to advance the conciliation process.
Having reached an agreement, the two countries will continue to meet with the commission in order to finalise talks in October.