MELBOURNE/THE HAGUE • Australia and Timor Leste have reached a breakthrough agreement on a maritime border, ending a decade-old row between the two nations that has stalled a US$40 billion (S$54 billion) offshore gas project.
The Permanent Court of Arbitration in The Hague yesterday announced that the neighbouring 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.
"Until all issues are resolved, the details of the parties' agreement will remain confidential," the statement said. "Nevertheless, the parties agree that the agreement reached on (Aug 30) marks a significant milestone in relations between them and in the historic friendship between the peoples of Timor Leste and Australia."
The leader of Timor Leste's delegation, chief negotiator and former president Xanana Gusmao, hailed the agreement as a historic moment.
Cubic metres of gas the fields are estimated to hold.
Australian Foreign Minister Julie Bishop said the agreement was a "landmark day" in the relationship between Timor Leste and Australia.
Timor Leste, a former Portuguese colony, 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 144 billion cubic metres of gas and 226 million barrels of condensate, which analysts have estimated could be worth US$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.
Having reached an agreement, the two countries will continue to meet the commission in order to finalise talks in October.