Foreign Minister Julie Bishop has rejected suggestions Australia has bullied Timor-Leste in the fight over natural gas and says it's time to renew the friendship in the first visit by a federal minister in nearly five years.
Since Australia's intervention as peacekeepers in Timor-Leste's establishment as a nation nearly 20 years ago when its people were being murdered by pro-Indonesian militias, the relationship between the countries has deteriorated.
The deterioration culminated in the prosecution of a former spy and whistleblower known as "Witness K" and his lawyer Bernard Colleary who had revealed Australia bugged Timor-Leste's cabinet during maritime boundary negotiations in 2004.
A maritime boundary deal was finally struck at the UN this year giving the majority of the Greater Sunrise gas field to Timor-Leste.
Julie Bishop is greeted by Timor-Leste's Prime Minister Taur Matan Ruak. Source: AAP
"We had a challenging relationship over the maritime boundary dispute but we resolved it in an exceedingly positive way," Ms Bishop told AAP.
"I don't accept that [Australia bullied Timor-Leste]. I think Australia negotiated an outcome that enabled for example the Baya Udan [gas fields] to be developed, which has given rise to the [Timor-Leste's] petroleum fund of some $17 billion."
Local media asked Ms Bishop whether Australia would encourage the project owners Woodside, Shell and Conoco Phillips to produce the gas in Timor-Leste but she said that was between the companies and Timor-Leste's government.
Julie Bishop meets students at the Agora Food Studio in Dili. Source: AAP
She would not be drawn on whether she discussed the spying issue and Witness K in the bilateral talks, saying it was a domestic issue that did not involve Timor-Leste.
Timor-Leste's Foreign Minister Dionisio Babo Soares acknowledged it was the first visit to Timor-Leste by an Australian foreign minister for "quite a while" but said the visit and UN deal were milestones between countries with strong, historical "people to people connections in times of need".
"Minister Bishop and I had a very candid, fruitful discussion on a range of issues to open a new chapter," he said.
Ms Bishop also met separately with Timor-Leste's president Francisco Guterres Lu'olo, Prime Minister Taur Matan Ruak and visited education and training projects Australia is providing aid to.
One of those, the Timorese seasonal workers program, will be increased from 914 this year to 1500 people able to go to Australia in six-month stints and earn far bigger wages to send home to family.
Heading into its 18th year of independence, Timor-Leste's economy is still small and desperately needs to diversify and attract foreign investment, relying on gas revenue for 95 per cent of its budget and unemployment, poverty and malnutrition remain significant problems.
Ms Bishop said Australia will continue to invest its development assistant program, which was $91 million this year.
Australia will also give the country two Austal-made Guardian-class patrol boats, she said.
