The Greater Sunrise oil and gas field in the Timor Sea has been the subject of exploration, controversy, and negotiations since it was first discovered in 1974. In particular, the question of where to liquefy the natural gas -- converting it into LNG which can be shipped to overseas customers -- has been vociferously debated since Indonesia was forced out of Timor-Leste in 1999.

After moving ahead in fits and starts, the Sunrise project is now getting closer to reality. This web page will include information and analysis about the project, especially events in 2010. For background and basic information, see the references linked to from the history section below.

Over the last few months, the discussion over Greater Sunrise has intensified, with Timor-Leste’s government, other Timorese politicians and NGOs, Woodside, the Australian government and many commentators offering their views. Timor-Leste media have been filled with polemics and misinformation regarding the Greater Sunrise gas field and the LNG plant that will go with it. La'o Hamutuk is a Timorese civil society organization which hopes that this project will give the maximum benefit to the Timorese people. We are concerned that many of the reports misrepresent the reality of the situation, which has economic, legal, technical and environmental aspects, not only politics, and we hope that this web page will help people better understand the issue.

History and background

In February 2008, La'o Hamutuk published a book Sunrise LNG in Timor-Leste: Dreams, Realities and Challenges, which is on-line in English and Bahasa Indonesia, with a summary in Tetum. The report includes a history of relevant events from 1970 through 2008.

The Sunrise controversy is entangled in the troubled history of maritime boundary negotiations between Timor-Leste, Australia and Indonesia which dates from before the Indonesian invasion. Follow this link for texts and commentary on the 2006 CMATS agreement or read a La'o Hamutuk Bulletin overview report from that time or a later 2007 article.

In 2004, La'o Hamutuk wrote a briefing paper for Timor-Leste's boundary negotiators entitled The Case for Saving Sunrise, suggesting that there was no advantage to Timor-Leste in developing the Sunrise field quickly, and that a delay of 10-15 years would greatly increase the benefits Timor-Leste's people would receive. Six years have passed, and our subsequent research confirms this view, which is now supported by many of Timor-Leste's leaders.

During 2008 we published a primer on LNG Basics and an article on potential benefits from Sunrise LNG in Timor-Leste.

The companies

The Sunrise project is operated by Woodside (Australia), which has a 33% share in the project shared with joint venture partners ConocoPhillips (USA, 30%), Royal Dutch Shell (UK/Netherlands, 27%) and Osaka Gas (Japan, 10%). They maintain that the development plan is strictly a commercial decision, to be made in the best financial interests of their stockholders and the Australia and Timor-Leste governments, under the rules as defined by the 2002 Timor Sea Treaty, the 2003 Production-Sharing Contracts, the 2003 International Unitization Agreement and the 2006 CMATS Treaty.

In June 2008, Woodside presented a "Concept Screening" report to the Australian and Timorese regulators, finding that a pipeline to Timor-Leste would be less profitable than a floating LNG project or a pipeline to Darwin. After world oil market prices collapsed later that year, they redid the study and reached the same conclusions the following year. Woodside promised to announce their decision between a mid-sea floating LNG plant (the first in the world) and expanding the existing LNG plant in Darwin by the end of 2009, but did not meet their deadline. Woodside's Annual Report from 2009 explained their view of the Sunrise project as of the end of that year.

Shell, which would like to develop floating LNG technology for use at other fields, has long supported this option. ConocoPhillips, on the other hand, built and operates an LNG plant at Wickham Point in Darwin, where the gas piped from Bayu-Undan is processed. They would like to expand that facility to liquefy Sunrise gas as well.

The governments

In mid-2008, Timor-Leste's State Secretariat for Natural Resources (SERN) created a Sunrise Task Force to develop their own information on the technical, economic and social aspects of the Sunrise project. The Task Force, with help from Petronas and a bathymetric (seabed depths) study supported by Korea Gas, concluded that a pipeline to Timor-Leste is technically possible -- a view which is also held by Woodside and Australia in recent years. Although the Task Force report has not been made public, it questions Woodside's determination that a pipeline to Timor-Leste is less profitable than the other options. However, as neither side has yet shared the details of their assumptions and analysis with the other, it is difficult to perform an independent assessment. Only one option will be chosen at the end of the day, regardless of whether others are also feasible.

La'o Hamutuk arranged a briefing by the Sunrise Task Force for ourselves and other civil society groups in February 2010, but we were not given technical details and are not at liberty to publish specifics. However, it is clear that the united Timor-Leste view is that the pipeline must be brought to Timor-Leste -- that this is the only fair outcome, since the pipeline for the other large gas field in the Timor Sea (Bayu-Undan), has already been built to Australia. Timor-Leste's Government hopes to use an onshore LNG plant in Beacu (Viqueque district) as the engine and centerpiece of a "national petroleum corridor" stretching westward along the south coast to Suai. By developing local industry, expertise and spinoffs, they hope to wean this country away from dependency on oil rents (royalties and taxes) and toward productive activities which can continue to thrive after the Sunrise and Bayu-Undan fields are empty. La'o Hamutuk hopes that this is possible, although we believe that not enough has been done yet in education, law-making, planning and infrastructure sectors for Timor-Leste to maximize its benefits from Sunrise LNG.

Australia has largely remained silent on the pipeline route, saying it's a matter for the companies to decide, However, this is disingenuous as Australia actively negotiated the three relevant treaties with Timor-Leste, and had largely achieved its goals by 2007. On 28 April 2010, the Australian Ambassador responded to accusations that his government had threatened Timor-Leste.

The public debate in 2010

In early 2010, the Government of Timor-Leste decided to take a hard public line: they would not approve any development plan which didn't include a pipeline to Timor-Leste and an LNG plant on the south coast. A 13 January press release Woodside’s development plans will not be approved for Greater Sunrise (also Portuguese) provoked extensive coverage in the local and international media. Over the next week, comments emerged from Woodside, Australia and Petronas, and it was clear that Timor-Leste had brought renewed attention to the debate. However, Timor-Leste has consistently said that it will keep its legal commitments in treaties and contracts Timor-Leste has already signed.

A month later, the RDTL Government publicly attacked former Prime Minister Mari Alkatiri (also Tetum) for offering suggestions on the Sunrise question. When President Jose Ramos-Horta suggested that a floating plant might be a compromise decision, the Government also disagreed. On 10 April, the Government spokesperson reaffirmed his January statement that any plan not involving an LNG plant in Timor-Leste would be rejected.

After repeated delays, on 29 April 2010 the Sunrise Joint Venture announced its preference for a floating plant. Timor-Leste's government responded (also Tetum) late that night, denouncing Woodside's "unacceptable level of arrogance" and reiterating that Timor-Leste "will not accept or endorse this concept and it’s associated plan now or in the future." Woodside's announcement was echoed by Shell and reported in the media, as was Timor-Leste's rejection.

Woodside said it plans to propose a Field Development Plan to Timor-Leste and Australian authorities in the next few weeks, and hopes to move the discussion past polemics to details. CEO Don Voelte was proud of their decision in his speech to Woodside's Annual General Meeting (see page 5) the following day.

Timor-Leste, on the other hand, "considers Woodside’s announcement a waste of valuable time, money and human capital; presenting a concept preference before appropriate consultation with the 'resource-owners'."

On 18 May, Woodside executives attempted to deliver their proposed Field Development Plan to the National Petroleum Authority (ANP) in Dili, but ANP refused to accept it. ANP president Gualdino da Silva said "the NPA was not in a position to accept the folders and they must take them back because they have not done all their homework," according to Australian media reports. For more than a year, the ANP has been telling Woodside to do a comparative analysis of three options (Darwin, Timor-Leste and floating) and obtain regulatory approval for  a design concept before the company prepares a detailed plan like the one it tried to present.

During the ensuing few weeks, the Sunrise debate was a subject of much coverage in the local and international media, with varying degrees of accuracy and objectivity. La'o Hamutuk continues to discuss the issue with many parties  -- ANP, SERN, as well as the representatives of Woodside and Australia in Timor-Leste, among others -- to try to understand what is happening.

Two recent press releases from the Timor-Leste Government maintained their position that the pipeline must come here, although some of the arguments seem a bit strained: Timor-Leste requires equitable benefits through Greater Sunrise (31 May, also Portuguese) and A lesson for Woodside in compliance; Timor-Leste can wait (4 June).  The "Equitable benefits" press release cites a 2002 ACIL report, a 2002 Australian Parliamentary Report and a 2009 Poten report which we have made available on this website.

From the other side, Woodside published a "Floating LNG at Sunrise" presentation their CEO gave at a UBS Resources Conference in Sydney on 3 June 2010. The company wrote to ANP in mid-June saying that it would present separate evaluations of three development options.

As both sides kept talking past each other, with continuing media coverage about the impasse, the Timor-Leste Government issued a press release (also Portuguese) on 22 June confirming that negotiations with Australia (albeit not with Woodside) continue through normal channels. Articles in international media tried to summarize the controversy, such as this one from Pacific Scoop.

The Sunrise Commission and Joint Commission met in Dili on 28 and 29 September.  The previous day, an all-day seminar at the National University of Timor-Leste rallied students and others to support Timor-Leste's demand for the pipeline to come here, and two days of demonstrations and marches greeted the negotiators.  During the talks, which were occasionally heated, Woodside presented Australia and Timor-Leste with three loose-leaf binders, presenting their analysis of pipelines to and LNG plants in Darwin, Beacu, and floating in mid-water. Spokespeople for Timor-Leste claimed that this indicates a change of Woodside policy and a willingness to evaluate the three alternatives, although Woodside maintains that it still prefers the floating option. Woodside's third-quarter report to Australian stock exchange regulators said simply "In September the Sunrise Joint Venture submitted its Concept Evaluation Reports to the Joint Petroleum Development Area and Australian regulators at the Sunrise Commission in Dili."

Although Woodside has said nothing on the subject since then, Timor-Leste's government has issued several press releases: Timor-Leste has active regulators in the petroleum sector (2 November 2010), Timor-Leste extends a lifeline to Woodside (9 Nov) and Government of Timor-Leste concerned about Woodside’s corporate downgrading by the Standard and Poor’s Ratings Service (8 Dec). As of early December, Timor-Leste has not responded to the Concept Evaluation Reports that Woodside submitted nine weeks earlier.

Separately, Timor-Leste's Ministry of Finance is investigating whether Woodside and other companies owe back taxes to Timor-Leste for selling Production Sharing Contracts, including Woodside's sale of their 40% share in JPDA06-105 to Eni in 2007.

The Sunrise negotiators met in December, but talks broke down, reportedly because Australian representatives were frustrated with Timor-Leste's insistence that the LNG plant be built here.

Stalemate continues in 2011

On 24 January 2011, Timor-Leste's government issued an unusually confrontational press release: Greater Sunrise negotiation forces Woodside to halt all operations. Later that week, President Jose Ramos-Horta, FRETILIN and Mari Alkatiri urged continuing dialogue, while Woodside reiterated its position that it follows the law and prefers a floating LNG plant, as described in The Australian. The next Sunrise Commission meeting was scheduled for March, but did not take place.

Timor-Leste's General State Budget for 2011 was promulgated in mid-February. La'o Hamutuk's December submission to Parliament expressed concern about $12.4 million of  "Timor-Leste’s money being spent on research and studies related to a possible onshore LNG plant, a project that may never happen. Although the Timorese public and the Government want the Sunrise gas to be piped to an onshore LNG plant in Beaçu, Woodside remains committed to a mid-sea floating LNG plant, which it thinks is more profitable. It seems unlikely that Woodside will believe Timor-Leste’s studies more than its own research, or that additional information (including vituperative press releases) from Timor-Leste will change Woodside’s view that a Timor-Leste onshore LNG project would earn the companies $2 billion less than a floating project. If Woodside is not persuaded, the project will remain stalled, and Timor-Leste’s $12.4 million or more will have provided work for foreign consultants and contractors, but no benefits for our people."

Woodside released their 2010 Annual Report (5 MB interactive PDF) on 21 February. See the Sunrise slides from outgoing CEO Don Voelte's presentation. The report says that "Sunrise also reached a major milestone during the year, with the Joint Venture selecting Floating LNG as the preferred development concept for the Greater Sunrise fields. In September 2010 we submitted concept evaluation reports to the Sunrise Commission, and the Australian and Timor-Leste regulators. We look forward to progressing the project in 2011 in line with international treaty obligations." According to the Annual Report, Greater Sunrise contains 5.13 trillion cubic feet of dry gas and 225.9 million barrels of condensate. Click here for the two pages on Sunrise.

On 10 March, an article in The Australian reported that Timor-Leste might withdraw from the CMATS Treaty, and the LNG trade press reported that Australia "sees no need to intervene" in the dispute over the field.  The Australian elaborated two days later, as did Petroleum Economist on 21 March.

An IMF Staff Report on Timor-Leste released in early March summarized hopes for spending more than ESI, saying that the Government feels that: "The current ESI does not capture potential revenues from the Greater Sunrise field, a confirmed petroleum resource. Moreover, more natural resources might be discovered." The IMF recommended that "the Ministry of Finance should begin evaluating [Greater Sunrise's] potential effect on petroleum wealth and fiscal financing. Perceived petroleum wealth from Sunrise is already informing wider thinking in government and civil society about sustainable spending levels, and quantification of the potential revenue flows would help to inform and guide that discussion. In particular, this exercise would allow the authorities to manage expectations and encourage a more realistic assessment of the potential addition to petroleum wealth from Sunrise."

The bi-national Joint Commission met in Dili in late March, although the Sunrise Commission did not meet. A banner headline in Diário Nasional (click on the headline to see the article) reported that Woodside had accepted that the pipeline will come to Timor-Leste, but in reality the company's preference for a floating LNG plant has not changed at all. La'o Hamutuk is saddened by the poor understanding of this critical issue among journalists and others.

During the beginning of 2011, three nearby floating LNG projects -- Flex LNG in Papua New Guinea, Shell's Prelude in Western Australia and the GDF Suez/Santos Bonaparte in Australia's part of the Timor Sea -- moved closer to construction. In June, Petronas hoped that its planned floating LNG plant in Western Malaysia would be first to begin operation, in early 2015.

At Woodside's Annual General Meeting on 20 April, outgoing CEO Don Voelte expressed "disappointment" with Timor-Leste's treaty compliance in his prepared remarks, which he developed further for the Australian media. The following day, Timor-Leste's government responded that Voelte's comments "dishonour Timor-Leste", generating further coverage. On 27 April, Timor-Leste cited an Australian Chief Minister: "Northern Territory Government confirms economic advantages of onshore processing."

Woodside selected former Exxon-Mobil executive Peter Coleman as their new head, and in mid-May he restated Woodside's commitment to a floating LNG plant for Greater Sunrise gas. At the end of May, outgoing CEO Don Voelte expressed his disappointment over the Sunrise deadlock.

Meanwhile, Timor-Leste leaders continued to debate negotiating personnel and strategy. Former Australian Foreign Minister Alexander Downer visited Timor-Leste, urging the companies to "be generous" but declining to state his view on the LNG plant siting debate. Timor-Leste President Jose Ramos-Horta reiterated concerns about "untested" floating technology, while Australia's Minister for Resources and Energy Martin Ferguson continued to support the companies' preference for this option.

La'o Hamutuk has published Cowboys, Ogres and Donors: A Decade of Corporate Social Responsibility in Practice by Mandy White, who represented Woodside in Timor-Leste in 2007-2008. The paper sharply criticizes Woodside's "ogres at the helm" and "sycophantic senior staff" taking a Public Relations approach, "not making even tokenistic efforts" to develop Timor-Leste. Whyte characterizes the company's "blundering arrogance:"  "Woodside steadfastly refused to regard the Timor-Leste Government as a partner in the development of the Sunrise fields, seemingly characterising them not only as a 'thorn in the side,' but also as devious and untrustworthy. ...  [D]riving forward to a final investment decision without the Timor-Leste Government demonstrates an arrogant lack of regard for the relationship."   After a resulting Radio Australia interview with Mandy Whyte, Woodside sent a statement to Radio Australia: "Woodside and its Sunrise Joint Venture participants are committed to progressing the Sunrise LNG Development in a way that provides sustainable long-term benefits to Timor-Leste in the form of opportunities for local participation, employment, training and community development. The Joint Venture continues to work closely with several organisations to deliver a range of social investment projects to deliver sustainable benefits to the health and education of the Timorese. These projects include World Vision's Water for Life program and the Alola Foundation's Maternity Packs and Safe Motherhood program." Whyte's article prompted further discussion, including this blog.

On 13 June, Reuters reported that a Shell senior executive planned to build the company's second floating LNG plant at Sunrise. The Government of Timor-Leste responded that Shell’s conflict of interest in Greater Sunrise excludes them from development dialogue, because the company is building floating LNG for projects around the world, leading them to adopt a "bulldoze PR campaign to coerce Timor-Leste and Australian citizens to pay for the technology," and the issue was picked up by the media. La'o Hamutuk understands that all private sector companies (especially the larger ones owned by investors) want the highest profit from all their activities, so that every company naturally decides its preferences regarding a particular project in the context of its worldwide balance sheet. This reality often leads oil companies, including Shell, to act against local interests, environment or communities, but is a characteristic of all such companies.

At a June conference, Australian petroleum engineer Geoff McKee explored possible ways out of the current Sunrise development impasse (4MB), suggesting a win-win solution which would allow Woodside to proceed with floating LNG while bringing some Sunrise gas to Timor-Leste to enhance energy security.

On 1 July, National Petroleum Authority President Gualdino da Silva gave a presentation on the Greater Sunrise project to an energy conference in Dili. He explained that Sunrise negotiations are temporarily suspended pending resolution of different views about who owns the gas after it is extracted from the seabed. When this is resolved, talks will continue about development options. The ANP also has doubts about the joint venture's reducing its estimates of the size of the Sunrise reserve, and has engaged an independent expert to review them.

With advance press coverage, new Woodside CEO Peter Coleman visited Dili on 22 August and met with Vice Prime Minister Jose Luis Guterres and Secretary of State for Natural Resources Alfredo Pires. Before he came, Coleman described the reasons for the visit: "I'm hoping for a re-establishment of earlier relationships. We hope to get dialogue going again ... to really understand where we have differences. ... there are far more things we agree on than we don't agree on."  However, Coleman reaffirmed Woodside's view that a floating plant is the only option the company will discuss: "I think it's too early for us to move away or even have discussions on a different development concept for Sunrise.  It just starts to cloud discussions and confuse. ... Before we start going down the path of saying 'My idea is better than your idea', the first thing to do is establish a relationship, establish one where we can sit in a room together and thrash out these issues."

After the meeting, Jose Luis Guterres reiterated Timor-Leste's position: "We want the Sunrise pipeline to come to East  Timor, as the treaty with Australia talks about the fair distribution of the resources and that those resources should benefit the people of East Timor and Australia. ... There is no justification for Australia already having benefited from a pipeline for development of the gas in Darwin and that East Timor has none.”  A month later, President Jose Ramos-Horta said that Timor-Leste's impression of Coleman was "very positive, ... but we have not made any progress in terms of the dispute..."

As both sides are maintaining their positions, the get-acquainted talks made no breakthroughs.  Nevertheless, the Sydney Morning Herald optimistically reported a New dawn for Timor Gas on 10 October, although a cover article in the Petroleum Economist industry magazine explained that The great game of Greater Sunrise is far more complicated.  Based on the 10 October SMH article, the Timorese newspaper Diario wrongly reported once again that "Woodside Accepts Pipeline to come to Timor-Leste" on 19 October, citing SERN Alfredo Pires (SERN staff says he didn't say this), but acknowledging deep in the article that Woodside had not confirmed that they now agreed to build a pipeline to Timor-Leste.

On Friday 21 October, Woodside released their third-quarter report to the Australian Stock Exchange. Its seven pages mention Sunrise briefly: "Woodside continues to build on engagement with both the Timor-Leste and Australian governments. ... Woodside CEO Peter Coleman visited Dili, Timor-Leste in August and held constructive meetings with Timor-Leste government representatives. Woodside is committed to continue discussions on the Greater Sunrise development." Tea-leaf-readers in the international media were quick to report a change in the company's position. However, La'o Hamutuk spoke with key people in Woodside and the Timor-Leste government on 22 October, and both sides affirmed that their strong preferences for mutually exclusive development options had not changed, although the tone of discussions is now less frosty than it was during Don Voelte's tenure.

On 16 November, during the Parliamentary debate on the proposed 2012 State Budget for the State Secretariat for Natural Resources, some Parliamentarians asked for a detailed study of how many Timorese workers could get jobs at a Sunrise LNG plant in Beacu (La'o Hamutuk's 2008 Sunrise report discusses this issue in depth). Secretary of State Alfredo Pires, citing PNG's experience, replied that about 10,000 jobs would be available during the construction phase (including feeding and housing foreign workers), but only 100-200 during plant operation. Pires was confident that Woodside will eventually accepting bring the pipeline here, citing his better relationship with their new CEO, prompting articles in the local and international media Woodside then reasserted its "desire" to see the project developed. Parliament approved $6.3 million for SERN in the 2012 State Budget on 25 November, including $1.8 million for the National Petroleum Authority (ANP) and $2.5 million for the new TimorGAP National Oil Company.

The same month, Timor Plaza proudly announced that the TimorGAP national oil company will rent offices there, and quoted TimorGAP President and Sunrise Commissioner Francisco da Costa Monteiro "There is much more hope now than ever before. If you look back at 2007, 2008, there was a lot of skepticism about the possibility of bringing in the pipeline," but now Woodside recognizes that it is technically feasible. Monteiro added that the main focus of the negotiations was now centered around the commercial viability of the project.

Just before Christmas, a Malaysian newspaper reported the Malaysian company Petro-Mekong Corp Sdn Bhd, together with Germany's Europipe GmbH, was close to getting a contract to be build a gas pipeline from Sunrise to Timor-Leste, although Woodside told La'o Hamutuk they are not involved in this process. On 16 January, Secretary of State for Natural Resources (SERN) Alfredo Pires told the local newspaper Diario that he and Prime Minister Xanana Gusmão will visit Germany to see gas pipes which could be used for the Sunrise project.

As 2012 began, the Sunrise issue became fodder for political squabbles, with the Government and the largest opposition party blaming each other for not reaching an agreement to enable the project to proceed with an LNG plant in Timor-Leste. However, SERN officials promised that the results of their studies on Sunrise would be available to whomever wins the June Parliamentary election.

According to article 12.2(a) of the CMATS Treaty (which enables Sunrise development by deferring discussion of maritime boundaries until the project is finished), either Australia or Timor-Leste can unilaterally cancel most of CMATS if no Sunrise development plan has been approved by 23 February 2013. Although neither side has said they want to do that, on 16 January 2012 Timor-Leste President Jose Ramos-Horta hinted at re-opening the taboo boundary discussion by asking 1,000 geologists and geology students gathered for a scientific conference in Dili to use their expertise to prove that Timor-Leste and Australia are on the same continental shelf, undercutting Australia's historical argument against a media line boundary which could put all of Sunrise in Timor-Leste's jurisdiction.

La'o Hamutuk will continue to follow this issue, and we welcome material from all sources.

For more information, see these web pages relating to the Sunrise project:

• Timor-Leste National Petroleum Authority

• Woodside

• Tasi Mane project

• TimorGAP National Oil Company

• Timor-Leste State Secretariat for Natural Resources Pipeline Task Force  [The SERN website was not working in January 2012.]

• LH: Having your gas and burning it too ... in Timor-Leste's draft Strategic Development Plan

• LH: Sunrise LNG in Timor-Leste: Dreams, Realities and Challenges (2008)

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Desenvolvimentu
Rua dos Martires da Patria, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-7234330
email: info@laohamutuk.org    Web: http://www.laohamutuk.org