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By Henning Gloystein and Sonali Paul

SINGAPORE/MELBOURNE, March 7 (Reuters) - East Timor andAustralia this week signed a treaty at the United Nationssetting their maritime boundary for the first time, and strikinga deal on sharing an estimated $65 billion in potential revenuesfrom the Greater Sunrise gas fields in the Timor Sea.

For impoverished East Timor, with a population of just 1.3million, development of the fields is crucial -- its main sourceof revenue since 2004, the Bayu Undan gas field, is set to runout of gas by 2022.

The treaty signing in New York on Tuesday marked the firstconciliation under the United Nations Convention on the Law ofthe Sea (UNCLOS) — a process UN Secretary-General AntónioGuterres said could offer other countries a path towardsresolving contentious maritime boundary disputes.

At current market prices, the Greater Sunrise reserves wouldbe worth more than 23 times East Timor's annual Gross DomesticProduct (GDP) of $2.8 billion.

Development of the reserves has been held back by themaritime border dispute between Australia and East Timor, aformer Portuguese colony that gained independence from Indonesiain 2002.

"The treaty is an important step that opens the way fordeveloping a rich, shared resource, the Greater Sunrise gasfields. We know this resource is crucial to Timor Leste'sdevelopment," said Australian Foreign Minister Julie Bishop, whosigned the treaty in New York on Tuesday with East Timor'sDeputy Minister of the Prime Minister for the Delimitation ofBorders Hermenegildo Augusto Cabral Pereira.

However, the Greater Sunrise joint venture, led byAustralia's Woodside Petroleum, which has been a keyparty in the long-running negotiation, said it was disappointedthat the treaty did not contain a full development plan for thegas reserves.

"It is disappointing that this process has not resulted inan alignment on a development concept," the Sunrise jointventure said in a statement on Wednesday.

The Sunrise partners did not specify what they felt wasmissing in the agreement, but it is likely that Dili insisted onthe gas being processed in East Timor for overseas sale, whilethe joint venture would prefer to pipe the gas to Australia.

Under the terms of the deal, East Timor will get 70 percentof revenues if processing takes place in East Timor, and 80percent should the gas be piped to Australia.

That compares with an equal share under a 2006 agreementbetween Dili and Canberra.

HOW MUCH GAS IS THERE?

The Sunrise and Troubadour gas fields, collectively known asGreater Sunrise, lie beneath waters 100 to 600 metres deep,making them shallow to medium-deepwater developments.

The fields were discovered in 1974 and, according toWoodside, hold around 5.13 trillion cubic feet of gas, theequivalent of more than a third of current annual global LNGconsumption.

At current market prices, the LNG would be worth almost $50billion.

Like most gas fields in the wider region, including PapuaNew Guinea's and Australia's huge liquefied natural gas (LNG)exports facilities, Greater Sunrise also contains significantamounts of condensate, an ultra-light form of crude oil.

Its 225.9 million barrels of condensate reserves at currentmarket prices would be worth over $15 billion.

WHO GETS WHAT?

Woodside and its partners have long said they would preferto develop the fields using a floating liquefied natural gas(FLNG) platform, considered the most cost-effective option, asthe fields are 150km away from East Timor and 450km away fromDarwin in Australia.

However the agreement signed on Tuesday lays out just twooptions -- piping the gas either to East Timor or Australia.

Dili has long pressed for the gas to be processed in EastTimor, looking to generate thousands of jobs in constructionand, once developed, in the lucrative oil and gas processing,storage, transport and petrochemical industries.

Australia, however, has existing gas infrastructure and anexperienced workforce, making it the industry's preferredlocation.

WHO IS INVOLVED?

The partners in Greater Sunrise are Australia's Woodside,U.S. firm ConocoPhillips, Anglo-Dutch Royal Dutch Shelland Japan's Osaka Gas.

Even with the new agreement, development could be yearsaway. Woodside said last May it may only develop Greater Sunriseafter 2027.

Energy markets are just recovering from years of oversupplythat depressed oil and gas prices and deterred development ofnew gas projects.

Asia's LNG markets, which Greater Sunrise would serve, areexpected to remain oversupplied into the early 2020s asproduction rises in Australia, North America, Papua New Guineaand also Qatar.

It's likely the Sunrise partners will bide their time beforecommitting billions of dollars to develop such a large project.

(Reporting by Henning Gloystein and Sonali PaulEditing by Bill Tarrant)