Australian Financial Review

February 21, 2002 Thursday

Strong Alliance With Shell In Timor Sea

Ian Howarth

Woodside managing director Mr John Akehurst has underlined his company's close relationship with the Royal Dutch/Shell group by strongly endorsing Shell's floating Liquefied Natural Gas plant proposal as the best way to develop the gas reserves of the Timor Sea.

Questioned yesterday about the likely fate of development plans for the Greater Sunrise gas fields in the Timor Sea, Mr Akehurst said, "We must start with the fundamental economics ... that the floating LNG proposal is significantly better than putting the LNG plant onshore. If we are going to have a debate [on Timor Sea gas development options] that must be the starting point."

That proposal, however, is contrary to the position of Phillips Petroleum, the third major partner in the Greater Sunrise joint venture with Shell and Woodside, which has promoted and strongly supports the Darwin LNG plant concept.

Mr Akehurst would not venture a view on the outcome of the Greater Sunrise joint discussions now underway, but said, "Joint venture decisions ought to be unanimous."

However, one of Phillips's options for the Darwin LNG plant has now expired.

Mr Akehurst confirmed yesterday that an earlier deal between Phillips and El Paso Energy, of the US, to ship Timor Sea-based LNG from Darwin to the west coast of the US had expired.

He added that the lengthy discussions between Woodside and Shell over the long-term relationship between the two companies were continuing.

The talks are aimed at resolving issues such as Woodside's need for international growth while also meeting Shell's desire not to have to compete against Woodside, in which it owns a 34 per cent stake.

Mr Akehurst threw down a challenge to Shell yesterday by stating that one of Woodside's key areas of interest in coming years would be exploration in the highly productive Gulf of Mexico, a region where Shell is already a major player.

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