Subject: AU: Dawn at hand for sharing Sunrise

Dawn at hand for sharing Sunrise

By Nigel Wilson 25-07-2005 From: The Australian

A DATE for signing the long-awaited agreement between Australia and East Timor on sharing Timor Sea petroleum revenues is expected to be decided this week. But development of the Greater Sunrise gas reservoir - which sparked the maritime boundary dispute with Australia - is no certainty even if the agreement survives the intense and erratic nature of East Timor politics.

Australia is seeking a temporary resource sharing agreement to allow Greater Sunrise to go ahead in the absence of permanent maritime boundaries between the two countries.

The Greater Sunrise field is the largest known petroleum resource in the Timor Sea and may contain as much as 300 million barrels of condensate and LPG, and about 8 trillion cubic feet of gas.

Development through a consortium headed by Woodside Petroleum and also comprising ConocoPhillips, Shell and Osaka Gas is stalled.

Woodside's chief executive, Don Voelte, travelled to East Timor last month to reaffirm his belief the only way a development can proceed is if the gas is brought onshore in Darwin and processed into LNG.

Under the proposed government-to-government agreement, Australia and East Timor will split Greater Sunrise revenues 50:50 rather than the 80:20 originally proposed.

But on the eve of Mr Voelte's meeting with East Timor's Prime Minister, Mari Alkatiri was quoted as again demanding that Greater Sunrise gas be brought ashore and processed in East Timor.

Dr Alkatiri said it made sense for his country and the developers. "It's a win-win situation, they will win and we also will win," he was quoted as saying.

This is a remarkable about face from Dr Alkatiri's position only weeks earlier that the location of processing facilities for the Greater Sunrise gas development was a matter for the project's owners and not for the Australian and East Timor governments.

The change in position emerged as Dr Alkatiri conducted a process of explanation to interest groups in East Timor of the proposed terms of the bilateral agreement.

The Greater Sunrise partners have yet to find buyers for Greater Sunrise gas.

Assuming that all necessary agreements are in place, they had planned to start production in about 2010.

According to the Timor Sea development office in Darwin, total revenues to East Timor and Australia from the Greater Sunrise field are estimated to be more than $US10 billion ($13.07 billion).

That compares with the $13 billion Australia says will flow to East Timor if the bilateral agreement is accepted by East Timor.

One of the issues causing concern among groups opposing the agreement is that world oil price movements in the past two years mean that the potential value of Greater Sunrise is significantly higher than was originally promoted.

An opponent of Australia keeping control of the Greater Sunrise assets, Geoff McKee, believes the value is four times greater than that being promoted by the Australian Government.

Mr McKee is also an advocate for pumping the gas across the 3000m-deep Timor Trough between the find and East Timor, saying such a proposition is technically feasible.

Woodside's counter argument is that, indeed, it is technically possible to build a pipeline across the trough but only at a cost and that cost was a penalty that would destroy the commercial viability of the Greater Sunrise project in a global market.

In effect, Mr Voelte told Dr Alkatiri that Greater Sunrise was by no means a world-beating project and that if it were to go ahead it would have to be on the basis that it was globally competitive.

If it wasn't, the partners would not proceed.

It's a message Mr Voelte and Woodside officials have been trying to convey to the East Timorese for months.

The Timor Sea Justice Campaign says the Australian Government has been stalling negotiations on permanent boundaries by refusing to follow international law and instead focusing on resource sharing deals.

While the deal on Greater Sunrise falls well short of East Timor's legal entitlements, the group says the 50 per cent split of government royalties is a promising improvement on the miserly 18 per cent previously offered.

TSJC spokesman Tom Clarke believes that growing public pressure on the Australian Government to give East Timor a fair go has led to a more considered approach.

Copyright 2005 News Limited. All times AEST (GMT + 10). http://adserver.news.com.au/


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