Australia and East Timor have signed a treaty that allows them to share billions of dollars in revenues from disputed oil and gas fields.
The agreement ends a long-running row over lucrative energy reserves in the Timor Sea.
The East Timorese government has said it was happy with the agreement.
Foreign Minister Jose Ramos Horta insisted it was a win-win situation. His impoverished country could earn up to $10bn from the deal.
East Timor certainly needs the money, as it is still heavily reliant on foreign aid since it became independent from Indonesia in 2002.
The treaty with Australia ends a marathon dispute over energy resources in the Timor Sea. Over the past two years, negotiations have at times been acrimonious.
Australia was forced to deny accusations that it was trying to bully its tiny neighbour.
It is hoped the arrangement should clear the way for the start of gas and oil production in the Greater Sunrise field, which is regarded as the jewel beneath the Timor Sea and is worth an absolute fortune.
A statement released in Canberra said Australia and East Timor would share the proceeds equally if the project goes ahead. After so many delays, the companies involved in the Greater Sunrise plan have not yet decided if it will proceed.
Talks on the sensitive issue of a maritime boundary between the two countries have been shelved as part of this energy treaty.
A final decision has been deferred for 50 years, to allow oil and gas schemes to go ahead.
TIMOR SEA RESOURCES
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