The Greater Sunrise field is the largest known petroleum resource in the Timor Sea. The Greater Sunrise field may contain as much as 300 million barrels of condensate (light oil) and LPG, and about 8 trillion cubic feet of gas, which will be converted into LNG.. The Greater Sunrise field straddles the eastern perimeter of the Joint Petroleum Development Area (JPDA) established under the Timor Sea Treaty. See map. The field lies fully within an area that would likely belong to Timor-Leste under a maritime boundary agreement consistent with international law.
The International Unitisation Agreement and Memorandum of Understanding
The International Unitisation Agreement (IUA) and related Memorandum of Understanding (MOU) for the Greater Sunrise field were signed by the Governments of Timor-Leste and Australia on 6 March 2003.
As the Greater Sunrise field lies partly inside the JPDA and partly outside, It was necessary for Timor-Leste and Australia to reach agreement on developing the deposit as one unit (referred to as a unitisation agreement) for legal, fiscal and administrative purposes.
There are many examples around the world of unitisation agreements, for example, between the United Kingdom and the Netherlands in relation to the North Sea. However, the Greater Sunrise IUA is unique because it involves a petroleum deposit that straddles a temporary revenue sharing area, as opposed to a permanent maritime boundary.
Under the Greater Sunrise IUA, Timor-Leste will receive 18 per cent of the total government revenues from the field, while Australia will receive 82 per cent. Like the Timor Sea Treaty, the IUA in its current form will terminate when permanent maritime boundaries are agreed.
In recognition of Timor-Leste's taxing rights over the entire Greater Sunrise field, the MOU for Greater Sunrise records an agreement that Australia will make annual payments to Timor-Leste of (1) US$1 million during the construction phase of the Greater Sunrise development, and (2) US$10 million once the field goes into production. These payments will be made only if the field is developed with a floating LNG plant located in the Greater Sunrise area, rather than an onshore plant.
The IUA and MOU have not yet been ratified by the Timor-Leste National Parliament. See Prime Minister Alkatiri's comments on this issue.
Development of the Greater Sunrise Field
The Greater Sunrise partnership consists of the operator Woodside Energy, Royal Dutch/Shell, ConocoPhillips, and Osaka Gas.
The Greater Sunrise partners have not yet agreed on a development concept for the gas in the field. There are three options under consideration:
(1) Transporting the gas to Timor-Leste and processing it at a new LNG plant in Timor-Leste. An LNG plant located in Timor-Leste would be much closer to the field than a plant in Australia. It would also provide important stimulus to the local economy. Therefore, the Timor-Leste Government is actively encouraging the companies to give serious consideration to this option.
(2) Transporting the gas to Darwin, Australia and processing it at an existing LNG plant in Darwin.
(3) Processing the gas at sea at an LNG plant located on a ship.
The Greater Sunrise partners are currently looking for a buyer for Greater Sunrise gas.
Assuming that all necessary agreements are in place, they had planned to start production in about 2010. It is estimated that the life of the field will be approximately 30 years.
When developed, it is estimated that the field will have a life 30-40 years.
Potential benefit to Timor-Leste
Total revenues to Timor-Leste and Australia from the Greater Sunrise field are estimated more than US$10 billion. over the life of the field. If the field is developed under the Greater Sunrise IUA and MOU, Timor-Leste's share would be approximately US$1 billion. However, if the field is developed after Timor-Leste and Australia have agreed to maritime boundaries that are consistent with international law, Timor-Leste's share would likely be significantly greater.