La’o Hamutuk

How much oil money has Australia stolen from East Timor already?
A look at Laminaria-Corallina

Calculations by La’o Hamutuk, February 2008.

The Laminaria-Corallina oil field in the Timor Sea is just outside the Joint Petroleum Development Area, twice as close to East Timor as it is to Australia. It belongs to East Timor under current international legal principles (UNCLOS). Laminaria-Corallina began production in late 1999, and is now about 89% depleted. Australia has made a lot of money from this field, but East Timor has not received one cent. Because of high oil prices, Laminaria continues in production, producing an unexpected windfall for Woodside.

How much did Australia get? The following very conservative calculations show that Australia received at least A$2.6 billion (US $1.5 billion) in government revenues from Laminaria-Corallina through the end of 2007, and the actual figure is significantly higher.

Until March 2005, Woodside’s ownership share of the joint ventures is 44.9% of Laminaria and 50% of Corallina. This 47.9% proportion was constant until March 11, 2005, when Woodside purchased an additional share of Laminaria from Shell. Since then, Woodside's share is 59.9% of Laminaria and 66.67% of Corallina, amounting to about 64.5% of total production.

The following table gives Woodside’s sales revenues from Laminaria-Corallina for each year from 1999 through 2007. From this, we can calculate the total income to all joint venture partners from these fields, and approximate the tax they would have paid to the Australian government.

Year	1999	2000	2001	2002	2003	2004	2005	2006	2007	Total
Laminaria-Corallina sales revenues (Woodside share, A$m)[1]	91	979	817	565	348	264	315	437	327	A$4,144m
L-C total sales (A$m), calculated from Woodside’s share	190	2,045	1707	1181	726	552	548	677	512	A$8,138m
Effective Tax Rate[2]	13.8%	31.3%	31.2%	33.3%	36.4%	34.1%	27.1%	29.7%	31.2%
Estimated tax paid on Laminaria-Corallina (A$million)	26	640	533	393	264	188	149	201	152	A$2,546m
Exchange rate (A$/US$)	0.60	0.54	0.52	0.54	0.65	0.70	0.75	0.76	0.84
Estimated tax paid to Australia on L/C (US$million)	16	346	277	214	172	131	111	152	127	US$1,547m

Woodside spent A$796 million on Laminaria-Corallina for capital, exploration and investment between 1997 and 1999, and some before that. This represents a total investment of more than A$1,663 million (approximately US$1 billion) in the project, much of which would have been taxed.

In addition to Laminaria-Corallina, Australia collected revenues from smaller fields (Buffalo, Buller) outside the JPDA but inside East Timor’s legal EEZ rights, as well as a 50% share from Elang-Kakatua (in the JPDA) prior to May 2002, when their portion was reduced to 10%. These total about US$50 million in revenues paid to the Australian and Indonesian governments which rightfully belong to East Timor.

Notes

[1] 1999-2002 from “10-Year Comparative Data Summary” in Woodside’s Annual Report for 2002, page 83.
2003 from "Woodside Full Financial Report for the Year Ended 31 December 2003" page 17.
2004 and later Woodside annual and quarterly ASX Announcements.

[2] Rates for 1999-2001 from Woodside 2002 Concise Annual Report (p. 63 and 83).
2002 and later from Woodside annual and quarterly ASX Announcements.

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
Rua D. Alberto Ricardo, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-77234330
email: info@laohamutuk.org Web: http://www.laohamutuk.org Blog: laohamutuk.blogspot.com

How much oil money has Australia stolen from East Timor already? A look at Laminaria-Corallina

How much oil money has Australia stolen from East Timor already?
A look at Laminaria-Corallina