Herald Sun (Australia) February 24, 2001

Joint deal on Timor gas

By JOHN McCARTHY

WOODSIDE and Phillips Petroleum have formalised an agreement to co-operate in the development of Timor Sea assets at Bayu Undan and Greater Sunrise.

Under a deal announced yesterday, the development costs of both projects will be slashed by as much as $1 billion. Phillips will also get marketing rights over Bayu Undan gas which will be backed up by gas from Sunrise, giving customers the confidence to sign long-term contracts.

Woodside will hand Phillips an extra 16 per cent of the Greater Sunrise project, giving it a total 30 per cent.

In return Phillips will pay Woodside's capital costs for developing Sunrise to the value of $US176 million ($A338 million).

Woodside will retain a 33 per cent stake in Greater Sunrise after the completion of the deal.

Phillips Australia president Stephen Brand said the sharing of offshore pipeline infrastructure and co-ordination of offshore and onshore operations would reduce the development costs of both fields while meeting the requirements of a large customer base in the Northern Territory and the east coast.

Other participants in the Greater Sunrise project, Shell and Osaka Gas, have pre-emptive rights under the joint operating agreements and Shell has agreed to waive its pre-emptive right in respect of this transfer.

In the event of Shell taking control of Woodside, Phillips also has an option to further increase its equity in Greater Sunrise to a level equal to Shell.

This was apparently a key point in the negotiation of the deal.

Shell has also offered Woodside an option on a 25 per cent interest in the Shell-operated Evans Shoal gas field.

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