Situated within close proximity to Northern Australia, the small yet strategically important colony of Portuguese Timor played a significant role in Australian security considerations during the first half of the twentieth century prior to the outbreak of the Pacific War. To date understandings of Australian interests in Portuguese Timor have focussed on the Japanese occupation period between 1942 and 1945, as well as the more recent history in Timor-Leste with respect to tensions over access to oil and gas reserves in the Timor Sea. Yet the significance of Portuguese Timor to Australia prior to the outbreak of the Pacific War has received scant attention. Australia’s leaders feared for their nation’s security should the colony fall into the orbit of Japan’s sphere of influence. This presentation discusses the origins of Australian interest in Timor’s oil reserves, as well as the measures pursued by Australia’s leaders in an attempt to counter Japanese penetration of the colony. Further, it exposes Australia’s inherent policy inconsistencies - appeasing Japan in its expansion into China, while taking a firmer stance in checking the Japanese when closer to the Australian mainland.