Joint Media release from the Australian Minister for Foreign Affairs, Alexander Downer, and the Minister for Industry, Science and Resources, Nick Minchin

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1 August 2001

Timor Gap: Phillips Petroleum's Decision to Defer Pipeline

We are disappointed by the decision announced today by Phillips Petroleum and its co-venturers to defer the decision on the proposed pipeline from the Bayu-Undan project to Darwin.

The deferral arises from uncertainty about the legal and fiscal regime to apply in the Timor Gap as a result of tax proposals put forward by UNTAET/East Timor. Australia shares many of industries' concerns.

It is unfortunate that just hours after we agreed the Timor Sea Arrangement in Dili, UNTAET/East Timor announced that it would use its taxation powers to recover up to an additional US$500 million in tax from the companies.

Under the Arrangement, the terms of the existing contracts are to be preserved. The core reason for preserving those terms was to maintain the existing financial basis for investment underpinning the current and planned projects. It is important that this commitment be adhered to.

The preservation of those terms was part of the total package in which Australia generously agreed to a 90:10 split of government revenues in favour of East Timor.

The companies and UNTAET/East Timor have been holding separate talks on the fiscal arrangements since we endorsed the Timor Sea Arrangement in Dili in early July.

It is important that East Timor reaffirms their earlier commitment regarding the fiscal and taxation policies that would apply to the companies.

The Australian Government is committed to continuing to work with UNTAET/East Timor and industry to ensure that the Timor Sea Arrangement is successfully implemented to ensure the benefits from Timor Sea gas developments are realised

It is important for future investments that there be commercial confidence and certainty in East Timor.

Media inquiries:
Matt Francis (Mr Downer's Office) 02 6277 7500
Jen Eddy (Senator Minchin's Office) 02 6277 7580

Local Date: Tuesday, 22-May-2012 06:23:00 EST