Subject: AU: Timor project go-ahead

The Australian

Timor project go-ahead By Yvonne Ball 07mar03

US ENERGY giant ConocoPhillips is ready to begin construction of its $3.8 billion Bayu-Undan LNG project after a belated agreement clearing the development of oil and gas reserves in the Timor Sea.

"We're really happy, it is great news ... It has been a busy last couple of days," ConocoPhillips Darwin area manager Blair Murphy said yesterday.

"We're working on getting (a) final investment decision with our company, we expect that shortly and then (we will) start construction within the next couple of months."

The development of the Bayu-Undan field, 500km north west of Darwin, cleared its last major hurdle when federal Parliament approved the long-awaited Timor Sea Treaty yesterday. The treaty splits revenues from shared resource-rich waters north of Australia 90-10 in favour of East Timor.

The ratification came as Foreign Minister Alexander Downer flew to Dili to sign a separate, more controversial deal over revenues from the Greater Sunrise gas field, which overlaps the treaty area but is mainly in Australian waters.

Australia approved the treaty just five days before expiry of a crucial supply deal for the Bayu-Undan joint venture, and on the last possible parliamentary day, as the house does not sit next week.

Without parliamentary approval this week, the deal for Bayu-Undan to supply three million tonnes of liquefied natural gas a year for 17 years from 2006 to Japanese power companies would have expired, putting the project in doubt.

The gas field contains an estimated 400 million barrels of condensate and liquefied petroleum gas and 3.4 trillion cubic feet of natural gas.

The LNG development, which includes a $1 billion pipeline and a $1.8 billion LNG plant in Darwin, is expected to take three years, with production scheduled to begin by 2006.

Construction of a $3 billion first stage involving the production of natural gas liquids is on track for an April 2004 start-up. ConocoPhillips' partners include Santos, with 11.83 per cent, and Agip, with 12.32 per cent.

Santos managing director John Ellice-Flint said the group's share of production would be three million barrels of oil equivalent a year.

Mr Murphy said ratification of the treaty also augured well for the $6.6 billion development of the much bigger Greater Sunrise fields, which contain more than 9.2 trillion cubic feet of natural gas.

But the project's joint venture partners, ConocoPhillips, Woodside Petroleum, Shell and Osaka Gas, have not yet determined how the fields will be developed.

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