Reference despatch D.O.22 of 9th February , cablegram 74 of 11th March , and your telegram Timor Oil.  Desire you act on and communicate to United Kingdom authorities following views:-
Commonwealth Government has reviewed fully whole position including suggestions for Netherlands co-operation.
Primary consideration from Australian viewpoint is that Japanese should not secure concessions in Timor.
Our information is that Wittouck  has not obtained any concession yet, the Portuguese Government having admitted he has moral claim only. If this is so, then we do not see why Wittouck should be compensated. On other hand, if in fact Wittouck has a legal claim all possible steps should be taken to enable Oil Concessions to obtain further concession to cover whole of Portuguese Timor.
In the first place Commonwealth Government is anxious not to become involved and we prefer see Dodson Oil Concessions develop and exploit concessions with own capital.
The second order of preference would be for the United Kingdom and Commonwealth Governments jointly to provide financial assistance to Oil Concessions if this proves necessary. Any proposal to this end should, however, be submitted to Governments for consideration and before any commitment made.
The third order of preference would be the formation of an operating company comprising Oil Concessions, Anglo-Iranian and Commonwealth Oil Refineries.
We are of opinion that Netherlands interests, through the Royal Dutch Company, should be invited to co-operate only if nothing can be arranged about first three proposals.
It is considered that if Wittouck has no justifiable claim, every effort should be made to obtain prompt decision from Portuguese Government conceding balance of territory to Oil Concessions.
Ambassador at Lisbon  could be instructed to press for this along with early decision on Darwin-Dilli air route, and also to obtain information as to precise position of Wittouck.
In respect of air service, you are aware Portuguese Government has agreed in principle to establishment of service and we have had draft agreement lodged at Lisbon since August last but Ambassador cannot obtain final decision. In circumstances, we see no reason to enlist Netherlands co-operation in this service. Moreover, from various reports to Foreign Office from Consul-General, Batavia, it appears Portuguese have refused to entertain a K.N.I.L.M.
extension to Timor since 1937.