Subject: E Timor Interested in LNG Plant for Sunrise Gas
International Oil Daily
January 26, 2004
East Timor Pushes for Sunrise Gas Decision
The government of East Timor is trying to interest the owners of the Greater Sunrise gas project in the Timor Sea to build a liquefied natural gas terminal East Timor -- on the grounds that the country lies only about 150 kilometers from the offshore fields, compared with the roughly 500 km that gas would have to be piped if the LNG receiving plant were to be built in the northern Australian city of Darwin.
Greater Sunrise is owned by Australia's Woodside, Royal Dutch/Shell, US major ConocoPhillips and Japan's Osaka Gas
"We're trying to encourage the companies to at least look at the possibility of whether it would be more economical to build it in East Timor," said a source in the East Timorese government. "We're not going to push for it if it doesn't make financial sense; this would ultimately affect East Timor's revenues from the JPDA [Joint Petroleum Development Area ]."
Buoyed by talk of selling Australian gas to US markets, operator Woodside is again pushing for development of Greater Sunrise, after earlier disputes with Conoco over whether to pipe the gas to Australia or build the world's first floating LNG operation at the site. All the partners except Conoco favor the floating LNG plant.
Under its plan for development of gas reserves at the Bayu-Undan field in the Timor Sea, Conoco will build an LNG plant in Darwin (IOD Jun.17,p8).
The East Timorese source said that to his knowledge the companies have never looked at the possibility of building an LNG receiving terminal in East Timor. Woodside was unavailable for comment on Monday due to a national holiday in Australia. The source said that East Timor badly needs more petroleum industry-related jobs to develop its economy. Currently some 68 East Timorese work for Conoco at Bayu-Undan, which is set to go into commercial production later this year, starting with condensate and other liquids.
Woodside said last week that it hopes to begin design work for the multibillion-dollar LNG project at Sunrise, which would hopefully translate into beginning production in about five years, provided the consortium can find customers and figure out whether to build the floating LNG facility or install pipelines.
The East Timor source said that Woodside has been in discussions with the government there, and that their relationship isn't characterized by the tetchiness that exists between the governments of East Timor and Australia over establishing a permanent boundary between the two countries.
East Timor is keen to see development begin in the JPDA since it will receive 90% of revenues from the area, which only accounts for 18% of the entire Greater Sunrise field. The East Timorese argue that if a median line were drawn between the two countries, all of Greater Sunrise would belong to East Timor (see map).
The source said that representatives of the two governments will meet in East Timor's capital, Dili, in April to begin "serious negotiations" over a permanent maritime boundary, although a schedule has yet to be set for finalizing the discussions. Once the issue has been settled, all interim agreements like the JPDA will become null and void, he said.
A study by the owners of Greater Sunrise in 2002 determined that there is not sufficient industrial demand in northern Australia to warrant the construction of a pipeline from Greater Sunrise to Darwin. Woodside owns 33.4% of Sunrise, with Shell holding 26.6%, Conoco 30% and Osaka Gas 10%. Conoco argues that industrial demand in northern Australia is irrelevant, since it expects to begin shipping LNG from Darwin to Japan in 2006.
"What's driving Woodside are good market opportunities, particularly in the United States where the government seems keen to source gas from Australia," said the source in East Timor, noting that US Energy Secretary Spencer Abraham was in Australia recently to talk with potential suppliers of LNG. Woodside partner Osaka Gas could also presumably drum up some sales for Sunrise gas in Japan.
James Irwin, Singapore
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