Also: Phillips Wants Timor Sea Treaty Ratified By Year End

Australia Wants To Ratify Timor Sea Treaty By Yr End -Min

Canberra, Oct. 18 (Dow Jones) - Australia wants to ratify the Timor Sea Treaty with East Timor by the end of this year, Industry, Tourism and Resources Minister Ian Macfarlane said Friday.

"The federal government is committed to having the treaty signed by the end of December and at this stage those negotiations are continuing," he told reporters.

"We're doing everything we can to have that treaty completed," he said. The Timor Sea Treaty was signed by Australia and East Timor when East Timor formally became an independent nation on May 20. It hasn't yet been ratified by either nation.

The treaty is the fundamental document setting out how the economic benefits of energy developments in a Joint Petroleum Development Area in the Timor Sea are shared between the two nations.

Macfarlane also said negotiations are continuing over a unitization agreement for the greater Sunrise gas field in the Timor Sea.

The unitization agreement is necessary because Greater Sunrise straddles Australian territory and the Joint Petroleum Development Area. An international unitization agreement, a relatively common feature in the oil industry, allows for unified development of a field where two countries agree on development of a shared resource.

Joint venture partners in Great Sunrise have said they won't go ahead with any developments until the agreement is reached.

Phillips Wants Timor Sea Treaty Ratified By Year End

Canberra, Oct. 21 (Dow Jones) - Phillips Petroleum Co. wants the Timor Sea Treaty ratified by the end of the year, fearing a delay past that deadline could be fatal to stage two of its Bayu-Undan project, Blair Murphy, the company's Darwin area manager said late Friday.

Murphy also argued that ratification of the treaty shouldn't be tied to successful completion of a unitization agreement covering the Greater Sunrise gas project in the Timor Sea, as the two pacts are "quite separate."

Australia and East Timor have signed a memorandum of understanding to complete the unitization agreement by the end of the year, but it is a complicated process, he said.

"We would question whether they could succeed in doing that; we hope they can," he told Dow Jones Newswires. "The risk that Phillips runs is that if the project is delayed too much then our customers will want to look for gas elsewhere. We've got our project all set up, we shouldn't have to wait on someone else's project."

Murphy was commenting after Industry, Tourism and Resources Minister Ian Macfarlane said Friday the government is committed to having the treaty signed by the end of the year. Macfarlane also said negotiations with East Timor are continuing over the unitization agreement.

The minister told reporters he wouldn't separate the two pacts, saying Australia wanted the two linked.

The Timor Sea Treaty was signed by Australia and East Timor when East Timor formally became an independent nation May 20. It hasn't yet been ratified by either nation.

The treaty is the fundamental document setting out how the economic benefits of energy developments in a Joint Petroleum Development Area in the Timor Sea are shared between the two nations.

The unitization agreement is necessary because Greater Sunrise project straddles Australian territory and the Joint Petroleum Development Area.

An international unitization agreement, a relatively common feature in the oil industry, allows for unified development of a field where two countries agree on development of a shared resource.

Phillips is operator and major stakeholder in Bayu-Undan, located in the Timor Sea about 500 kilometers northwest of Darwin and 250 kilometers southeast of Suai town, east Timor, within the Joint Petroleum Development Area.

Stage one of Bayu-Undan, a US$1.8 billion liquids stripping and lean gas recycle project is under construction, with first production scheduled for the fourth quarter of 2003, cranking to commercial production in the following quarter.

Stage two of Bayu-Undan, to which the joint venture partners haven't yet committed, will see natural gas hauled by undersea pipe to Darwin for processing into liquefied natural gas and export to Japan, he said.

Bayu-Undan is contracted to supply 3 million metric tons of LNG a year to Tokyo Electric Power Co. and Tokyo Gas Co. for 17 years from January 2006, the deadline that Murphy fears mightn't be met.