One year later, Australia and Indonesia began drafting a treaty to share resources in the Timor Gap.

Billions of barrels of oil lie under the Timor Sea just off the coast in what is known as the Timor Gap.

"By the second half of this decade, the Timor Gap could be producing as much as $150 million a year for East Timor."

East Timor has staked a claim to virtually all the resources of the Timor Gap, while Australia is seeking to maintain the 50-50 split.

Previously, East Timor received just half of the proceeds from development in the Timor Gap, an area of about 30,000 square miles.

Woodside Petroleum of Australia also has interests in the Timor Gap.

The field is located in the Timor Gap where Australia and East Timor have overlapping claims over the continental shelf or seabed.

The boundary is separated into three segments, with the first two broken by the Timor Gap.

Large oil and gas reserves lie in the sea between the two countries in an area known as the Timor Gap.

In 2003, Downer signed an agreement over the gas and oil reserves in the Timor Gap.