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Timor Sea Office
Office of the Prime Minister

13 February 2004

Timor-Leste Welcomes Start of Production at Bayu-Undan

The Prime Minister of Timor-Leste (East Timor), Dr Mari Alkatiri today welcomed the start of production from the Bayu-Undan field in the Timor Sea.

A regular flow of wet gas from the wells on the floor of the Timor Sea was confirmed today by ConocoPhillips, the operator of the project. 

The US$1.8 billion investment by the Bayu-Undan joint venture in the first phase of production reaffirms Timor-Leste’s capacity to offer a stable and attractive business environment to foreign investors. The start of production at Bayu-Undan comes less than two years after Timor-Leste regained its independence in May 2002.

“The start of production is an historic milestone in Timor-Leste’s struggle for economic independence. The Bayu-Undan project is expected to provide a significant source of revenue to our economy over the next 20 years, averaging more than US$100 million a year, " Dr Alkatiri said.

“I acknowledge the professionalism of the Bayu-Undan joint venture in bringing this enormous project to fruition, he added. 

"People from Timor-Leste have played an important role in this project. About 70 Timorese worked on the platforms during the construction phase after undergoing rigorous training. This is a significant achievement given that our people had no previous experience in this internationally-competitive industry, Dr Alkatiri said.

The Government of Timor-Leste gave high priority to getting an international legal regime in place that would enable the development of this project. Coinciding with independence on 20 May 2002, the governments of Timor-Leste and Australia signed the Timor Sea Treaty. This Treaty created the Joint Petroleum Development Area (JPDA) in an area of the Timor Sea, within which Bayu-Undan is located. Timor-Leste earns 90 per cent of the tax and royalty revenues paid by companies working in the JPDA.

Bayu-Undan contains estimated recoverable reserves of 400 million barrels of condensate (light oil) and liquefied petroleum gas (LPG), and 3.4 trillion cubic feet of natural gas. It is located in 80 metres of water about 250 kilometers south of Suai, Timor-Leste, and 500 kilometres northwest of Darwin, Australia.

In this first “liquids” phase of the project, which commenced this week, the Bayu-Undan platforms will process wet gas. Condensate, together with propane and butane, will be separated and shipped while dry gas will be re-injected back into the reservoir. The dry gas will be recovered and piped to Darwin, Australia during the second “gas” phase, which is expected to begin in early 2006. ConocoPhillips and its partners have signed binding contracts for the sale of nearly all of the natural gas reserves with Tokyo Gas and Tokyo Electric companies in Japan.

ConocoPhillips has a current participating interest of 56.72 percent (this includes 8.25 percent interest held by Petroz).  Co-venturers and their current participating interests are: Eni Australia, 12.04 per cent; Santos, 10.64 per cent; INPEX, 10.53 per cent; and Tokyo Electric Power and Tokyo Gas Company, 10.08 per cent.

For more information, go to the OilWeb copy of Timor Sea Office website.
Contact: Paul Cleary +670 723 4151;;
Manuel Mendonca; +670 723 4155;

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
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