Bayu-Undan is the most significant petroleum discovery so far in the Timor Sea Treaty area, known as the Joint Petroleum Development Area (JPDA). See map.
The Bayu-Undan field may contain reserves of 400 million barrels of condensate (light oil) and liquid petroleum gas (LPG), and 3.4 trillion cubic feet of gas. The reserves have an estimated value of US$6-7 billion.
The Bayu-Undan field is operated by ConocoPhillips (formerly Phillips Petroleum). ConocoPhillips' partners in the Bayu-Undan development are petroleum companies Eni, Emet, Inpex, Petroz and Santos.
Development of the Bayu-Undan field
The development of the Bayu-Undan field will proceed in two phases: a gas liquids phase followed by a gas phase. The Timor Sea Designated Authority, which represents Timor-Leste and Australia in the JPDA, approved the development plan for the gas liquids phase in February 2000, and the development plan for the gas phase in June 2003.
The Bayu-Undan Platforms
The Gas Liquids Phase: Bayu-Undan began producing gas liquids (condensate and liquid petroleum gas (LPG) in February 2004. This phase involves extracting the gas, separating the liquids and then reinjecting the gas back into the reservoir where it will remain until the second phase commences. A floating processing and storage facility, 'Liberdade', which was built in South Korea and delivered to the Timor Sea in October 2003, is permanently anchored at Bayu-Undan during this phase.
"Liberdade' is the largest floating LPG storage facility ever built. It is the size of three football fields and can store about 230,000 cubic metres of condensate and LPG - the equivalent of 90 Olympic swimming pools. 'Liberdade' processes the condensate and LPG and stores them before they are loaded onto tankers for export. The products will be sold to various buyers on the open market.
The Gas Phase: Bayu-Undan is expected to begin producing LNG in 2006. In this phase, the gas will be extracted from the reservoir and transported to Darwin, Australia via a pipeline. There, it will be liquefied at a processing plant and then shipped as liquefied natural gas (LNG) to customers Tokyo Electric Power Company and Tokyo Gas Co. Ltd. (TE/TG) in Japan. ConocoPhillips has entered into agreements with TE/TG to supply three million tonnes of Bayu-Undan LNG per year (over 17 years). The construction of the pipeline is estimated to cost about US$500 million. The LNG liquefaction plant in Darwin is estimated to cost about US$1 billion.
Potential benefit to Timor-Leste
The estimated benefit to Timor-Leste from the full Bayu-Undan development is around US$5 billion over the life of the field, likely to be about 20 years. These resources will go some of the way to assisting Timor-Leste's reconstruction and development. By way of comparison, the current annual expenditure budget of Timor-Leste is about US$75 million.