East Timor will reap most of the revenue from an “historic” treaty signed with Australia aimed at resolving a boundary dispute involving the Greater Sunrise oil and gas reserves in the Timor Sea.

Australian Foreign Affairs Minister Julie Bishop and East Timor deputy minister for the Delimitation of Borders Agio Pereira signed the treaty at the United Nations in New York on Tuesday.

East Timor will receive between 70 to 80 per cent of the revenue from the reserves, estimated to be worth up to $56 billion.

“The agreement divides the revenues from the development of that project either 80/20 or 70/30 in Timor’s favour depending upon circumstances surrounding the development,” Ms Bishop told reporters.

“So clearly, should the development of Greater Sunrise proceed through the work of joint venture partners, then substantial benefits will flow to Timor.”

Ms Bishop said she looked forward to release of the UN Conciliation Commission’s independent report and analysis of the options to develop Greater Sunrise.

Mr Pereira said the negotiations between the nations were tough but Timor Leste and Australia remained friends.

“This treaty establishes a special regime for the Greater Sunrise gas field and a pathway to the development of the resource,” Mr Pereira told the ceremony.

The conclusion of this treaty clarifies the rights and responsibilities of Timor Leste and Australia with regard to the resources and activities that fall within our respective sovereign territories.”

UN Secretary-General Antonio Guterres, a longtime supporter of East Timor and its independence, hailed it as an historic breakthrough for the UN.

“This ceremony demonstrates the strength of international law and the effectiveness of resolving disputes through peaceful means,” he said.

“A central element in the Charter of the United Nations, the peaceful settlement of disputes is also a cornerstone of the United Nations Convention on the Law of the Sea, to which both Australia and Timor-Leste are parties.

“This event is historic as it marks the successful conclusion of the first-ever conciliation proceedings under Annex V to the Convention

Ms Bishop said Australia also has a treaty with Indonesia.

Indonesian Foreign Minister Retno Lestari Priansari Marsudi has congratulated Australia and East Timor on the deal.

“The Australia-Indonesia treaty will remain and it does open the way for Timor Leste and Indonesia to negotiate the changing boundaries,” Ms Bishop said.

“That will have an automatic flow on effect of adapting the eastern and western boundaries of the Australian-Timor Leste treaty we signed today.”

-AAP