China bolsters ties with gas-rich Timor-Leste

He said he would continue to foster a relationship with the United States, but added that Timor-Leste would not be implicated in any rivalry between Beijing and Washington. Timor-Leste welcomes strong ties with all countries, including its southern neighbour Australia, Mr Ramos-Horta said last year.

Upgrading their ties, China and Timor-Leste agreed to co-operation under the Belt and Road Initiative championed by Mr Xi, that could open the way for investment in infrastructure.

Looking beyond South-East Asia, China has built ties with small nations in the Pacific during recent years, worrying the United States and allies Australia and New Zealand, who have long considered the region as their sphere of influence.

China sent its military-run hospital ship to the Pacific in July to visit countries including Timor-Leste and Solomon Islands.

Australia and its allies have been working hard to counter China’s influence in the Pacific, especially after the Solomon Islands sparked alarm last year by signing a security pact with Beijing, raising the prospect of a Chinese military presence in the key island chain.

A DFAT spokesperson said on Sunday the new partnership was a matter for China and Timor-Leste. “Australia respects Timor-Leste’s sovereignty and ability to make its own choices,” the spokesperson said.

In a joint declaration, released on state run China Central Television (CCTV) on Saturday, China said it would provide help for Timor-Leste’s economic and societal development.

Both sides agreed on close high-level military interactions, an expansion of bilateral investment, and co-operation in areas including infrastructure and food, the statement said. The two governments said they would strengthen energy policy exchange and study possibilities for joint exploration for oil and gas.

Timor-Leste is looking to start producing natural gas from its Greater Sunrise fields by about 2030, hoping to develop the offshore project that has been stuck in limbo for decades.

The development of the Greater Sunrise field is critical to the island nation’s economy as its main source of revenue – the Bayu Undan oil and gas field – stopped producing gas earlier this year.

Mr Gusmao supports building an LNG processing plant in Timor-Leste and piping the gas there, rather than project operator Woodside’s preferred option of the established energy hub of Darwin.

Development of the Greater Sunrise gas and condensate field, located 150 kilometres from Timor-Leste and 450 kilometres from Darwin, is considered by many to be crucial to Timor-Leste’s economic viability and regional stability.

Timor-Leste controls 56.56 per cent of the Greater Sunrise offshore field, Woodside 33.44 per cent and Japan’s Osaka Gas 10 per cent.

The former Portuguese colony was occupied by Indonesia for a quarter-century and gained independence after a UN-sponsored referendum in 1999. Indonesia’s military responded with scorched-earth attacks that devastated the Timor-Leste half of the island of Timor.

The country’s transition to a democracy has been rocky, with leaders battling massive poverty, unemployment and corruption as the country continues to struggle with the legacy of its bloody independence battle and bitter factional politics that have occasionally erupted into violence. Its economy is reliant on dwindling offshore oil revenues.

Reuters