Timor-Leste's President José Ramos-Horta has revealed China is "very interested" in partnering with his government on a contentious gas project.
Mr Ramos-Horta said he'd had informal discussions with Chinese officials about their potential involvement in the project over the last two or three years.
"They are very interested and they even told me they are very interested even to be the sole partners," he told 7.30.
He said Timor-Leste had never made an official approach to China, "but we do have an excellent relationship with China".
Mr Ramos-Horta has previously warned Australia that if it did not intervene to help his country resolve a stand-off with Australian energy giant Woodside over the gas project, Timor-Leste would turn to China.
He has called on Australia and Woodside to "extend the hand of friendship" and agree that gas from a deposit in the Timor Sea should be sent to Timor-Leste rather than Australia for processing.
Currently Woodside and Timor-Leste are negotiating over the future of the "Greater Sunrise" oil and gas deposits between the two countries.
Woodside has suggested that if the gas is processed in Timor-Leste then the project may not be viable.
Timor-Leste says it should benefit from the additional jobs and profits that can come with processing.
While Woodside and Timor-Leste have an agreement about how royalties for the deposits will be divided, Timor-Leste is unlikely to be able to pay for the multi-million-dollar investment required to build a processing facility.
Mr Ramos-Horta's comments about other options if Woodside walks away from Greater Sunrise will cause concern in Canberra.
He has previously said: "We will work with Indonesia, we will work with South Korea or with China, if necessary."
That sentiment was supported by the man leading Timor-Leste's negotiations with Woodside, Florentino Ferreira — president of the country's National Authority of Petroleum and Minerals.
"If Woodside decide to leave the project, it is entirely up to them," he said. "And I think we should be ready for whatever scenarios eventuate ... without Woodside we have to find some other partners to work together."
While China's increased presence in the Indo-Pacific has made Australia realise that it needs to work harder to shore up support in the region, it appears to have also given many countries a sense that when it comes to Australia they have a greater leverage than previously — whether they will use it or not.
Mr Ferreira reflected Timor-Leste's growing confidence — not just because of China's interest, but also because of the increasingly strong world energy market.
"I think Timor-Leste is in a stronger position not merely because of China," he said.
"Timor-Leste is in a stronger position because of the energy demand in the region and worldwide. Currently, we are seeing high demand for energy due to the Ukraine and Russia war and I think Timor-Leste could become a player in the region and provide solutions."
While negotiations over Greater Sunrise have been going on at a low level for some years, Timor-Leste is now saying that it wants an agreement by the end of this year.
"We need to have Greater Sunrise operational, commercially, within the next seven, eight years, maximum. So we have to make a decision by the end of this year," Mr Ramos-Horta said.
Part of the urgency on Dili's part is that its petroleum fund is running out of money. This is the fund from previous oil and gas deals which pays the lion's share of the country's expenditure. The fund has fallen to about $18 billion, while Timor-Leste is drawing an estimated $1.8 billion a year from the fund.
Asked would Timor-Leste run out of money if Greater Sunrise did not go ahead, Mr Ramos-Horta told the ABC: "Well, not immediately. But within 10 years we could run out of money. It could be catastrophic."
Chinese military base ruled out
Mr Ramos-Horta definitively ruled out any Chinese military bases in his country.
When asked by 7.30 whether he would allow any such base, Mr Ramos-Horta said he would not allow the establishment of a base by any "hostile power" or country that is "perceived to be potentially hostile".
The declaration will come as a relief to Australia's defence, foreign policy and intelligence communities who were alarmed when Solomon Islands signed a security agreement with China in March.
Solomon Islands Prime Minister Manasseh Sogavare said at the time that Australia remained his country's security partner of choice and that the agreement did not include any military facility.
But what caused great concern in Canberra was when he said that he would call on Beijing for security personnel if there was a "gap" that his country needed to fill.
"If there is any gap, we will not allow our country to go down the drain. If there is a gap, we will call on support from China," Mr Sogavare said.
Mr Ramos-Horta, speaking before leaving Dili to visit Australia this week, said Timor-Leste, also known as East Timor, was strategically more important than Solomon Islands.
"Timor-Leste is very strategic," he said.
"When you look at the map, far more strategic than Solomon Islands. We are a one-hour flight to Darwin, one hour to Indonesia, three hours to Singapore, in a very vital strategic waterway."
Asked would he allow a Chinese military base in his country, he replied: "We have a responsibility to our neighbours, to Australia, to Indonesia, to other South-East Asian countries not to allow Timor-Leste to be a base for any hostile power or power that is perceived by our neighbours to be potentially hostile.
"A prosperous, stable Timor-Leste is in Australia's best interests because Timor-Leste should sit in the geography of Australia's greater strategic interests."
Hundreds of Chinese workers employed to build port
In Timor-Leste, China maintains a presence at both an infrastructure level and a small projects level.
The Tibar deepwater port has been built by a Chinese construction company, China Harbour. The overall project is managed by the French firm Bollore, which contracted construction to China Harbour.
According to Bollore, 400 Chinese workers have worked on the project, along with 600 workers from Timor-Leste and other countries.
The ABC spoke to one worker from Sri Lanka who said he had worked on China Harbour projects in Doha, Colombo (in Sri Lanka) and Timor-Leste.
While in Dili, the ABC also came across a large crowd. Hundreds of people had gathered around the Chinese ambassador to Timor-Leste, Xiao Jianguo, for the opening of a new soccer field donated by Beijing.
Dr Xiao told the ABC that the project marked the 20th anniversary of diplomatic ties between the two countries.
When asked should Australians be concerned about the growing influence of China in the region, he said: "I have no idea whether Australia is concerned about the influence from China."
Asked about China's statements that it would not militarise the South China Sea before doing so, Dr Xiao said: "Today I'm the ambassador to Timor-Leste so I prefer to [be] talking about the bilateral relations and how to consolidate our existing cooperation."
Bumpy relationship
The history of negotiations between Australia and Timor-Leste over the Timor Sea has not always been a smooth one.
Famously, Australian intelligence was revealed as having bugged the office of East Timorese negotiators in 2004.
Officers from the Australian Secret Intelligence Service (ASIS) used a ship that was moored about 500 metres from the cabinet office to pick up audio from listening devices which had been hidden in the office.
It was clear from Mr Ramos-Horta's comments to the ABC that there is still some residual resentment over the affair, but that he did not regard the new Albanese government as responsible.
"Spying on North Korea or Russia and China is normal," he said. "That's what countries do. But spying on one of the poorest countries in the world, we'd just come out of a tragic conflict ... spying on us to get even greater advantage, it was shocking to me. And I was very disappointed with the government of John Howard and Alexander Downer."
Clinton Fernandes, a professor of international and political studies at the University of New South Wales, said the incident was highly regrettable.
"Timor is not our enemy. They have never committed aggression against us. And so they present no threat," he said.
"They are in fact an innocent victim. And we happen to act like a predator."
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