Financial Times: Australia and E Timor reach oil and gas deal: "Its partners - Royal Dutch/ Shell, Osaka Gas and ConocoPhillips - had already spent A$250m on the project before it was put on hold in November 2004.": Thursday 12 January 2006
By Leora Moldofsky in Sydney
Published: January 12 2006
Australia and East Timor have agreed to equally share oil and gas revenues from the Timor Sea in a deal that may restart the stalled Greater Sunrise gas project.
The deal could potentially deliver up to A$14.5bn (US$10.9) to East Timor over 20 years, said Alexander Downer, Australian foreign minister, after the agreement was signed in Sydney on Thursday.
However Woodside Petroleum, the Australian energy company which holds a 34.4 per cent stake in the development, and is expected to be its operator, said that the development of Greater Sunrise remained on hold due to a lack of certainty.
Chief executive Don Voelte told Financial Times this week that he would only reconsider restarting the project, expected to cost A$6.6bn, once the agreement had been ratified by lawmakers in the two nations and then only if the development was considered to be as commercially promising as Woodside’s other gas projects.
“Sunrise has lost valuable years,” he said.
Gordon Ramsay, an energy analyst at UBS in Sydney, said while Greater Sunrise was once one of the most advanced projects for Woodside, the Perth-based company was “now clearly focused on other gas projects”.
The agreement between the two nations was concluded last month in Darwin after eight rounds of often-heated negotiations over maritime boundaries and revenue sharing.
Australia had initially said it was entitled to 80 per cent of royalties from the Greater Sunrise project as four-fifths of the deposits, which are estimated to be worth around A$40bn, lay in the seabed under Australian sovereignty.
John Howard, prime minister, said the revised arrangement was “a fair and just outcome,” and “[it] will make a very, very important contribution,”
Mari Alkatiri, East Timor’s prime minister, said “I am quite confident my parliament will ratify the treaty after some tough questions because it is good for the people of East Timor.”
The two nations also agreed to put maritime boundary and jurisdictional claims on hold for fifty years.
East Timor is already entitled to 90 per cent of revenues from the development of the Bayu-Undan field in located in the Timor Gap.
The Greater Sunrise field is estimated to contain around 8,000m cubic feet of gas and about 300m barrels of condensate.
Its partners - Royal Dutch/ Shell, Osaka Gas and ConocoPhillips - had already spent A$250m on the project before it was put on hold in November 2004.
Woodside said a decision on the location of a liquefied natural gas processing plant had yet to be resolved. While East Timor has wanted the plant to be built on its soil, Woodside has preferred Wickham Point in northern Australia, where a plant is being built for ConocoPhillip’s Bayu-Undan project.
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