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-June 2005 (page 3)


Alkatiri shrugs off Woodside concerns
Prime Minister Mari Alkatiri has shrugged off concerns that petroleum company Woodside may cancel its Timor Sea project because the governments of Timor-Leste and Australia have not yet reached a maritime boundary agreement. Responding to journalist’s questions regarding information that Woodside Petroleum will move its exploration plans from Greater Sunrise to the Broome oil field in Western Australia, Alkatiri said that there are many other companies that would be interested in investing in Greater Sunrise. He added that in any case, Timor-Leste does not yet need revenue from Greater Sunrise as the revenue from the Bayu-Undan field is enough for the time being.
Timor Post (translation from original Tetun)
Friday 10 June 2005

East Timor gas deal may be on backburner
Laboured negotiations could continue, writes Asia-Pacific editor Rowan Callick.

The agreement between Australia and East Timor that appeared to be concluded in Sydney three weeks ago has still not been signed off by East Timor's Prime Minister, Mari Alkatiri.

Dr Alkatiri is indicating that he may wish to reopen fundamental issues that had appeared resolved at that sixth round of talks.

In an interview with Timorese newspaper Publico he said that yet another round of negotiations or possibly two would be needed in order to find a "creative solution".

"It is said that the devil is in the details. It would be good if we do not allow this space to be occupied by the devil," he told the paper.

The deal negotiated in Sydney involved postponing more discussion on the maritime boundary between the countries for 50 years.

East Timor's share of the receipts from the Greater Sunrise gas field, straddling the border agreed three decades ago by Australia and Indonesia, would increase from 18 per cent to 50 per cent, earning it up to an extra $5 billion.

Dr Alkatiri said that if his country gained any revenues from Sunrise within six or seven years "we would be very lucky". The value of the potential agreement, its long duration and the suspension of claimed sovereign rights that it involves, underline its importance to the Timorese.

A spokesman for Woodside Petroleum, Sunrise's operator, said the project would remain stalled, with staff reassigned "until we get the legal, regulatory and fiscal stability necessary for us to proceed".

"We haven't seen the agreement they are negotiating, but when we have done we would then as a joint venture reconsider restarting the project," he said.

The other partners are ConocoPhillips, Shell and Osaka Gas.

The issues that the joint venture would need resolved are the location of the boundary between the countries, the map of the approvals process and the details of the tax structure and revenue-sharing arrangement. Once those are made clear and accepted by the project partners, Woodside would then seek to start or resume negotiations with potential customers, followed by heads of agreement, letters of intent and sales agreements.

Only then could construction start. The fourth-train expansion at the North-West Shelf gas field took 38 months, taking the process close to Dr Alkatiri's projection of six or seven years before receiving revenue.

The Woodside spokesman said: "We think that during the 2011-2014 period the liquefied natural gas market will provide a significant opportunity for Australian producers, before everyone else starts to catch up" with global demand, and thus probably prices, running high.

One of the major outstanding issues at Sunrise is the location of the LNG processing plant, which would cost several billion dollars. East Timor wants the plant to be built there, but a pipeline from the field would have to first negotiate a five kilometre-deep trench.

East Timor's Foreign Minister, Jose Ramos Horta, wrote in a column in The Age on Monday that "we are on the cusp of securing for the people of East Timor the fairest agreement possible". But the issue of where the pipeline should go had still to be resolved with Woodside, he said.

Canberra has previously said that such decisions should be left to the commercial operators.

The Woodside spokesman said: "The joint venture did a feasibility study last year and found the option of taking the pipeline to East Timor was not viable."

Woodside's favoured alternative has been to pipe the gas to Darwin to a plant already being built to process gas from the Bayu-Undan field, operated by ConocoPhillips.

"We would bolt on to their plant and export to the same places," the Woodside spokesman said.
The Financial Review, Rowan Callick
Friday 3 June 2005

East Timor says Woodside "arrogant" over gas field
East Timor said on Thursday an agreement with Australia over revenues from a major gas field in seas between the two countries could unravel because of a dispute over the location of a gas processing plant.

East Timor's Foreign Minister Jose Ramos-Horta said Australia's Woodside Petroleum Ltd. (WPL.AX: ) , operator of the Greater Sunrise gas field in the Timor Sea, was "arrogant" in its belief that building a processing plant in East Timor was not viable.

"We are not prepared to allow Woodside in a very arrogant fashion to dictate where the pipeline should go," Ramos-Horta told Reuters by telephone from Lisbon.

Ramos-Horta said the dispute could jeopardise a draft agreement between East Timor and Australia reached in April on how to divide billions of dollars in revenue from the field.

"They are creating very serious reservations in East Timor as to whether the Australian side is acting in good faith in terms of the development of Greater Sunrise," he said.

Woodside said a feasibility study conducted last year by the Greater Sunrise consortium found it was not viable to transport the gas to East Timor, for several reasons, including waters that were too deep.

"We are as keen as anyone to get the project going but it has to be commercial," said Rob Millhouse, a spokesman for Woodside.

Woodside froze the project in December last year after talks between East Timor and Australia over revenue sharing and sea borders collapsed.

Millhouse said Woodside preferred to transport the gas to Wickham Point near the northern Australian city of Darwin, where a liquefied natural gas (LNG) plant is already being built for the ConocoPhillips-operated Bayu Undan project.

The Greater Sunrise field contains an estimated 8 trillion cubic feet of gas, which would provide vital revenues for East Timor, a country currently reliant on foreign aid.

Under the draft agreement, Australia has offered East Timor additional revenue from the Greater Sunrise field. In exchange, East Timor would postpone establishing a permanent border in the Timor Sea for 50 years.

Woodside has a 33.4 percent stake in the Greater Sunrise consortium, ConocoPhillips (COP.N: ) has 30 percent, and Royal Dutch/Shell (RD.AS: ) (SHEL.L: ) 26.56 percent. The balance is held by Japan's Osaka Gas Co. Ltd. (9532.T: ). Woodside is 34 percent-owned by Shell. ($1=A$1.33)
Thursday 2 June 2005

East Timor sees 6-year wait for Timor Sea revenues

East Timor's Prime Minister says it will begin receiving revenues from a deal on seabed boundaries with Australia within six years at the earliest.

Australia and East Timor are in dispute over the boundary, which will split massive oil and gas reserves under the Timor Sea.

East Timor's Prime Minister Mari Alkatiri has told the daily newspaper Publico that key details remain unresolved in the negotiations, although a broad agreement has been reached.

"It is said that the devil is in the details. It would be good if we do not allow this space to be occupied by the devil. All our efforts are going towards finding a creative solution," he said.

"We are exchanging emails to see if we can iron out the details. We will need one or two more rounds of talks."

Asked if East Timor expected to collect energy revenues stemming from the deal with Australia later this year, Mr Alkatiri said, "Certainly not".

"If they arrive within six, seven years we would already be very lucky," he said.

Since last month, it has been reported within Australia that an agreement over the maritime boundary between the two countries has been concluded.

However, East Timorese officials have denied that a final accord has been reached.

A 1972 sea boundary agreed between Australia and Indonesia gave Australia two-thirds of the sea area between the two nations and most of its energy resources, which are estimated to be worth $A76 billion.

East Timor, which won independence from Indonesia three years ago, wants the boundary set at the mid-point between East Timor and Australia, giving it most of the resources.

Mr Alkatiri has refused to say which details still needed to be ironed out with Australia.

East Timor is setting up a special fund through which energy revenues can be set aside for future generations and hopes oil and gas revenues will end its status as one of Asia's poorest countries.
1 June 2005

East Timor says 'devil in detail' on resource sharing deal Australia

Last Updated 01/06/2005, 03:08:18

East Timor's Prime Minister Mari Alkatiri says key details of a resource sharing deal with Australia remain unresolved, and more talks will be necessary.

His comments came in an interview published in the Portuguese daily Publico.

Mr Alkatiri says while a broad agreement with Australia on exploitation of the oil and gas reserves of the Timor Sea has been reached, the 'devil is in the detail.'

And the prime minister says one or two more rounds of talks will be needed to iron out the problems.

Earlier this week, Australia's Foreign Minister, Alexander Downer, told Parliament that all the elements of the deal have been agreed and will now go for approval by Cabinet Ministers in both countries.
ABC Radio Australia
Wednesday 1 June 2005




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