On 30 January 2025 Prime Minister Kay Rala Xanana Gusmão told parliament that his government will review every defence, trade and infrastructure agreement signed with Canberra since 2018. The review will be accompanied by a new round of talks with Beijing later in the month, a move the premier said is driven by “unfinished sovereignty business.” The phrase points directly to the stalled negotiations over the Greater Sunrise gas field, a project valued at about US$50 billion.
Greater Sunrise lies roughly 450 km north‑west of Darwin and contains an estimated 5.1 trillion cubic feet of gas and at least 226 million barrels of condensate. Under a 2018 treaty, upstream revenue is split 80‑20 in favour of Timor‑Leste, but the downstream route for the gas remains unresolved. Australia prefers a floating LNG platform linked to its own supply chain, while Dili insists on an on‑shore processing plant at Beaçu on the south coast, arguing it would create local jobs.
Woodside Petroleum, the field’s operator, warned that the Beaçu option could add US$5 billion to project costs and jeopardise profitability. Gusmão rejected the argument, stating, “We did not fight 24 years for independence only to become a passive tax collector.
If Australia will not bend, we will find partners who will.” The partners the government is already courting are chiefly Chinese state banks and construction firms that have been active in Timor‑Leste’s ports and highways. In December 2024 Chinese Foreign Minister Wang Yi visited Dili and offered a US$1.8 billion package that includes development of the Beaçu industrial zone, an upgrade of a deep‑water port and a fibre‑optic link to Singapore.
The proposal dwarfs Australia’s annual aid package of US$330 million and carries no governance conditions, a point highlighted by Finance Minister Rui Augusto Gomes on 29 January, who said China “listens to what we need, not what they want us to be.” Analysts note a pattern in Chinese involvement: concessional loans, Chinese labour and eventual equity stakes that could give Beijing strategic control over key infrastructure. The Tibar port, financed by China’s Exim Bank in 2019, is already run by the state‑owned China Harbour Engineering.
A similar arrangement for Beaçu would place a Chinese‑controlled facility about 650 km from Australia’s northern air and naval bases. Australia remains Timor‑Leste’s largest donor, funding health posts, police training and a maritime patrol boat programme. However, Australian aid is tied to procurement rules that require Australian suppliers, inflating costs and causing delays.
A 2024 Australian National Audit Office review found that 38 % of infrastructure grants were returned unspent because local firms could not meet compliance standards. Former foreign minister Alexander Downer told ABC Radio on 30 January that “we are effectively subsidising our own contractors while Timor shops elsewhere.” Defence planners warn that any erosion of Australian influence could affect access to the deep‑water channel that serves Darwin, a logistics hub for U.S. Marine rotations.
Washington has urged Canberra to settle the Greater Sunrise terms quickly, fearing a security pact with Beijing similar to the one signed with the Solomon Islands. The United States reopened its embassy in Dili in 2023, but staffing remains limited to 12 officers and USAID programming is capped at US$15 million per year. At a Senate hearing on 28 January, Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink warned that “predatory lending risks undermining the rules‑based order in the Pacific,” while offering no new funding.
With national elections scheduled for 2026, the Timor‑Leste government seeks visible economic progress. Opposition leader Fretilin, though wary of Beijing’s opacity, admits Chinese cranes are more photogenic than Australian consultants’ spreadsheets.
Gusmão has given Canberra a 90‑day deadline to agree on the south‑coast pipeline route; otherwise, Beijing will finance a feasibility study that would lock in Chinese engineering standards. Australian Foreign Minister Penny Wong responded that any amendment to the 2018 treaty must be mutually agreed, signalling Canberra’s reluctance to make unilateral concessions. Behind the scenes, officials are exploring a compromise in which Australia could underwrite part of the Beaçu plant through export credits, preserving some procurement for Australian firms while limiting Chinese dominance.
Timor‑Leste’s petroleum fund, which finances about 90 % of the national budget, is projected to be exhausted by 2034 unless Greater Sunrise proceeds. The country now faces a stark choice: accept Australian terms and maintain Western alignment, or embrace Chinese financing and risk a debt trajectory similar to that of Fiji and Tonga.
The decision will shape not only Timor‑Leste’s economic future but also the strategic balance in the Pacific region.
