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The Australian

October 27, 2004 Wednesday All-round Country Edition

Alkatiri in Perth session on LNG

Nigel Wilson, Energy writer

EAST Timor Prime Minister Mari Alkatiri will discuss his country's latest demands for billions of dollars in LNG investment with senior Woodside and ConocoPhillips officials in Perth this week.

The talks follow East Timor's disclosure that the "creative solution" to the maritime boundary dispute with Australia involves the Greater Sunrise liquefied natural gas processing plant being located in East Timor.

In August, East Timor Foreign Minister Jose Ramos Horta said he hoped a creative solution could lead to the boundary dispute being resolved by Christmas.

Officials said yesterday East Timor's plant location demand, while not surprising, represented yet another moving of the goalposts for the boundary negotiations.

The Australian has learned Dr Alkatiri, who will be on a private visit to Perth, will explain the proposal at separate meetings with Woodside, the Greater Sunrise operator, and ConocoPhillips, which is the second-largest stakeholder in the Timor Sea project.

It is believed he will maintain that proposed fiscal and legal terms for Greater Sunrise, the International Unitisation Agreement, will not be ratified by the East Timor parliament unless there is a commitment to locate the LNG plant in his country.

Woodside and its partners -- which include ConocoPhillips, Shell and Osaka Gas -- are investigating three proposals: a floating facility close to the reservoir; piping the gas onshore to a site near ConocoPhillips' LNG plant under construction in Darwin, or piping it to East Timor.

While the Greater Sunrise reservoirs are far closer to East Timor than Australia, they are separated from the island by the Timor Trench, which is more than 3500m deep and beyond the scope of current technology for large diameter gas pipelines.

It is believed Dr Alkatiri will argue East Timor is willing to defer resolution of the boundary and opt for a solution that delivers "justice, fairness and economic development" for the East Timorese.

He will say this solution could be based on resources-sharing along the lines of the Timor Sea Treaty that covers the development of ConocoPhillips' Bayu Undan project.

Government officials at boundary talks in Dili, scheduled to end today, have been asked to consider the potential for including a pipeline and LNG as part of the settlement.

The East Timorese say such an outcome would mean much more revenue for the government, spearheaded by a significant investment in a domestic processing plant.

Such an investment would create many thousands of jobs and new business.

It is understood the East Timor Government believes it has the power to build economic development through its membership of the Joint Petroleum Development Authority on the Timor Sea that it shares with Australia.

Foreign Minister Alexander Downer said yesterday it appeared the East Timorese wanted "if not all, certainly the lion's share of oil and gas resources" outside the JPDA.

He was watching the Dili negotiations.

US gas hopes -- Page 39 --

ABC

Last Update: Wednesday, October 27, 2004. 12:50pm (AEST) Timor Sea gas on East Timorese PM's agenda

East Timor's Prime Minister will visit Australia this week, where he is expected to discuss new demands for Timor Sea gas to be processed in East Timor.

The proposal is up for discussion at talks in Dili to resolve the dispute over oil and gas revenues.

East Timor is now demanding that gas from the Greater Sunrise field be piped onshore to a proposed multi-billion dollar LNG plant in East Timor, rather than be processed offshore or in Australia.

Mari Alkatiri will travel to Perth on Friday where he is expected to discuss the proposal with commercial partners, Woodside and ConocoPhilips.

He could threaten to delay any deal until there is a commitment to build the LNG plant in East Timor.

The Northern Territory Government has campaigned equally to have the gas processed in Darwin.

The joint venturers have warned that without agreement by Christmas the Greater Sunrise project could stall for years.