Subject: East Timor sees 6-year wait for Timor Sea revenues

Also: WOODSIDE REBUFFS RAMOS HORTA; PIPELINE TO DARWIN NOT TIMOR; East Timor says Woodside "arrogant" over gas field  

East Timor sees 6-year wait for Timor Sea revenues

East Timor's Prime Minister says it will begin receiving revenues from a deal on seabed boundaries with Australia within six years at the earliest.

Australia and East Timor are in dispute over the boundary, which will split massive oil and gas reserves under the Timor Sea.

East Timor's Prime Minister Mari Alkatiri has told the daily newspaper Publico that key details remain unresolved in the negotiations, although a broad agreement has been reached.

"It is said that the devil is in the details. It would be good if we do not allow this space to be occupied by the devil. All our efforts are going towards finding a creative solution," he said.

"We are exchanging emails to see if we can iron out the details. We will need one or two more rounds of talks."

Asked if East Timor expected to collect energy revenues stemming from the deal with Australia later this year, Mr Alkatiri said, "Certainly not".

"If they arrive within six, seven years we would already be very lucky," he said.

Since last month, it has been reported within Australia that an agreement over the maritime boundary between the two countries has been concluded.

However, East Timorese officials have denied that a final accord has been reached.

A 1972 sea boundary agreed between Australia and Indonesia gave Australia two-thirds of the sea area between the two nations and most of its energy resources, which are estimated to be worth $A76 billion.

East Timor, which won independence from Indonesia three years ago, wants the boundary set at the mid-point between East Timor and Australia, giving it most of the resources.

Mr Alkatiri has refused to say which details still needed to be ironed out with Australia.

East Timor is setting up a special fund through which energy revenues can be set aside for future generations and hopes oil and gas revenues will end its status as one of Asia's poorest countries.

- AFP

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Australian Company News Bites

Australian Stock Exchange

May 30, 2005 Monday

WOODSIDE REBUFFS RAMOS HORTA; PIPELINE TO DARWIN NOT TIMOR

Woodside Petroleum Ltd says any gas pipeline from the Greater Sunrise field will go to Darwin and not East Timor, contradicting East Timor's Foreign Minister, Jose Ramos-Horta.

Mr Ramos-Horta, in an opinion article in The Age on May 30, 2005 said that negotiations between Australia and Timor Leste (East Timor) were continuing in good faith and near resolution.

He wrote that the 2002 Treaty would continue to be observed and Timor-Leste would continue to receive 90 percent of income from that area.

"The revenue split could mean more than $US7 billion ($A9.23 billion) to our impoverished country," Mr Ramos-Horta wrote. "Other fields underlying Greater Sunrise field either wholly or partly would be treated in the same manner as the Greater Sunrise field."

"There are some issues to be resolved with the operator, Woodside, namely where the pipeline should go," he said.

"To Timor-Leste's south coast, which is much closer to Greater Sunrise and to the Asia-Pacific customers, or to the barren Northern Territory, which has a very small population and is far from everywhere? Our labour costs are also much lower than Australia, which faces labour shortages and has stringent immigration and labour laws that are a disincentive to foreign workers. Petroleum experts from Saudi Arabia, Dubai, Kuwait and Germany all believe bringing the pipeline to Timor-Leste is technically feasible and makes sense commercially."

But Woodside spokesman Robert Millhouse disagreed on the economic viability of taking gas to East Timor. Mr Millhouse told News Bites the pipeline would go to Darwin, not East Timor.

"Economically that doesn't stack up," Mr Millhouse said. He said there was already a facility at Darwin and there were a range of technical issues that ruled out sending the petroleum gas to East Timor, including the depth of the offshore trench.

Mr Millhouse said his company didn't want to enter into a debate that could side-track negotiations. He said the international negotiations were not finalised and the four joint venture partners had not decided on "what we actually build".

He said the design of the off-shore platform facility, pipeline and gas treatment plant depended on the outcome of the government-to-government talks as it was still at the basis of design stage and would require each board to approve the final proposals.

Woodside (operator, 33.44%), Shell (26.56%), Conaco Phillips (30%) and Osaka Gas (10%).

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East Timor says Woodside "arrogant" over gas field

Thu Jun 2, 2005 07:24 AM ET

MELBOURNE, June 2 (Reuters) - East Timor said on Thursday an agreement with Australia over revenues from a major gas field in seas between the two countries could unravel because of a dispute over the location of a gas processing plant.

East Timor's Foreign Minister Jose Ramos-Horta said Australia's Woodside Petroleum Ltd. (WPL.AX: ) , operator of the Greater Sunrise gas field in the Timor Sea, was "arrogant" in its belief that building a processing plant in East Timor was not viable.

"We are not prepared to allow Woodside in a very arrogant fashion to dictate where the pipeline should go," Ramos-Horta told Reuters by telephone from Lisbon.

Ramos-Horta said the dispute could jeopardise a draft agreement between East Timor and Australia reached in April on how to divide billions of dollars in revenue from the field.

"They are creating very serious reservations in East Timor as to whether the Australian side is acting in good faith in terms of the development of Greater Sunrise," he said.

Woodside said a feasibility study conducted last year by the Greater Sunrise consortium found it was not viable to transport the gas to East Timor, for several reasons, including waters that were too deep.

"We are as keen as anyone to get the project going but it has to be commercial," said Rob Millhouse, a spokesman for Woodside.

Woodside froze the project in December last year after talks between East Timor and Australia over revenue sharing and sea borders collapsed.

Millhouse said Woodside preferred to transport the gas to Wickham Point near the northern Australian city of Darwin, where a liquefied natural gas (LNG) plant is already being built for the ConocoPhillips-operated Bayu Undan project.

The Greater Sunrise field contains an estimated 8 trillion cubic feet of gas, which would provide vital revenues for East Timor, a country currently reliant on foreign aid.

Under the draft agreement, Australia has offered East Timor additional revenue from the Greater Sunrise field. In exchange, East Timor would postpone establishing a permanent border in the Timor Sea for 50 years.

Woodside has a 33.4 percent stake in the Greater Sunrise consortium, ConocoPhillips (COP.N: ) has 30 percent, and Royal Dutch/Shell (RD.AS: ) (SHEL.L: ) 26.56 percent. The balance is held by Japan's Osaka Gas Co. Ltd. (9532.T: ) .

Woodside is 34 percent-owned by Shell. ($1=A$1.33)


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