Also - DJ: INTERVIEW: East Timor PM Says Canberra Deal In Sight; RT: Timor PM open to processing Sunrise gas in Australia

http://www.bloomberg.com

East Timor Says Australian Gas Royalty Agreement `Very Close'

June 17 (Bloomberg) -- East Timor and Australia are ``very close'' to an accord on the division of royalties from Woodside Petroleum Ltd.'s stalled $3.7 billion Sunrise natural gas project, said Prime Minister Mari Alkatiri.

The accord will be a temporary agreement to share the resources of Sunrise and will not prejudice East Timor's ability to seek a permanent maritime boundary at a later date, Alkatiri said yesterday evening in a public address in Melbourne.

East Timor, or Timor-Leste, broke away from Indonesia in May 2002 after a 24-year armed struggle and has been seeking to set its permanent boundary with Australia at a mid-point between the countries. Agreeing to the deal would mean East Timor setting aside its maritime boundary claim for 50 years, Australian Industry Minister Ian Macfarlane said June 6 in Darwin.

``We are very close to a deal, but still not really there,'' Alkatiri said in response to a question following his address. ``We are negotiating a sharing of resources, it's not a financial settlement. We reject the idea of a financial settlement.

East Timor would receive as much as $5 billion of extra revenue under a proposed agreement with Australia on splitting petroleum royalties from Sunrise, Macfarlane said June 6. In addition, East Timor will receive about $14 billion over the next 20 years from its 90 percent share of royalties from an area jointly administered by the two countries, he said. The actual amounts depend on oil prices, he said.

Woodside, Australia's second-biggest oil and gas producer, and its partners stopped work on the proposed $3.7 billion Sunrise gas project on Dec. 31 in the absence of an agreement between Australia and East Timor on royalties. Royal Dutch/Shell Group, ConocoPhillips and Osaka Gas Co. also have stakes in the Sunrise project.

--

Friday June 17, 4:33 PM

INTERVIEW: East Timor PM Says Canberra Deal In Sight

By Veronica Brooks Of DOW JONES NEWSWIRES

CANBERRA (Dow Jones)--East Timor's Prime Minister, Mari Alkatiri, said Friday he believes Dili and Canberra can quickly finalize a revenue-sharing agreement covering Woodside Petroleum Ltd.'s (WPL.AU) stalled US$5 billion Sunrise gas project in the Timor Sea.

"Yes, I think it is possible this month," Alkatiri told Dow Jones Newswires in an interview.

He also said that East Timor is determined, in resolving a few outstanding "technical issues" in the text of the agreement, that the deal won't prejudice the impoverished nation's right to seek a permanent maritime boundary further down the track.

Alkatiri's comments offer greater certainty that the neighboring countries are on the cusp of completing a pact, contrasting with recent comments from East Timor President Xanana Gusmao that Dili shouldn't rush into settling the dispute over oil and gas revenues before the three-year-old nation can handle the royalties.

Earlier this month, Australia's Resources Minister Ian Macfarlane said the agreement needs to be signed urgently because Woodside, operator of the Sunrise project, is seriously looking at other development options.

According to Macfarlane, the deal thrashed out between the two countries last month in Sydney could deliver an extra US$5 billion in petroleum royalties to East Timor in addition to existing revenue arrangements. In return, East Timor will agree to set aside negotiations on a permanent maritime border for 50 years.

But even if the deal is finalized this month, it will still take several months for the document to be ratified by parliaments in East Timor and Australia.

Alkatiri told Dow Jones Newswires the revenue-sharing treaty will help the East Timorese government eventually make much-needed investment in areas such as health, education and physical infrastructure.

As well, a portion of the revenues will be put into a petroleum fund, generating a perpetual stream of earnings that will support future generations of East Timorese.

And while conceding the yearlong negotiations between East Timor and Australia have been difficult, Alkatiri is "satisfied" with the end result.

"The relationship (between East Timor and Australia) is very good. We have managed to isolate outstanding issues from others," he said.

The key now is whether Woodside is willing to revive Sunrise, regarded as the richest prize in the Timor Sea.

A proposed liquefied natural gas export venture was shelved by Woodside late last year because of the uncertainty created by the maritime border row.

Perth-based Woodside insists that it won't proceed with further development studies until it obtains "fiscal, legal and regulatory certainty" over the project.

The company's current focus is its Browse project, located wholly in Australian waters. It is targeting a 2011 start that will export LNG to Asia, and potentially the U.S. West Coast.

http://asia.news.yahoo.com/050617/5/22ky8.html

--

Timor PM open to processing Sunrise gas in Australia 
Friday June 17, 2005, 6:20 pm

MELBOURNE, June 17 (Reuters) - East Timor said it would consider a plan for gas from the Greater Sunrise field to be processed in Australia, a promising step in efforts to develop the Timor Sea's biggest resource and provide billions of dollars to the tiny nation.

East Timor and Woodside Petroleum Ltd. (ASX: <http://au.finance.yahoo.com/q?s=WPL.ax&d=t&m=a>WPL.ax) disagree where the gas should be processed, which has added to a broader dispute between East Timor and Australia over dividing revenues from the field.

East Timor Prime Minister Mari Alkatiri said he believed transporting the gas via pipeline to East Timor was commercially feasible and still the best option, but did not rule out other options.

"I have to be convinced that technically, commercially its not feasible to do it in Timor Leste," Alkatiri told Reuters on the sidelines of a seminar in Melbourne.

"If i am convinced, then yes, why not? I am a pragmatic person, I am realistic."

Alkatiri said he hoped to meet with Woodside Chief Executive Don Voelte next week to discuss the options.

Woodside, which is seeking to develop Greater Sunrise at a cost of $5 billion, has long said it would prefer the gas to be transported to Wickham Point near the northern Australian city of Darwin where a liquefied natural gas (LNG) plant is already being built for ConocoPhillips's COP.N Bayu-Undan project.

The Greater Sunrise joint venture partners, ConocoPhillips, Royal Dutch/Shell RD.ASSHEL.L and Japan's Osaka Gas Co. Ltd. 9532.T would prefer the gas be processed at an offshore floating facility.

But before Woodside will even consider developing the fields, Australia and East Timor must finalise a draft agreement over splitting Greater Sunrise revenues so it can be put before the parliament's of both countries for ratification.

Alkatiri on Friday reiterated his was optimistic the draft would soon be finalised.

Under the draft agreement, reached in April, East Timor has agreed to shelve talks on drawing up a permanent sea border in exchange for up to $5 billion in additional royalty payments from Greater Sunrise.

The Greater Sunrise joint venture was originally aiming to deliver its first LNG in 2010 but the project was stalled in December when talks between East Timor and Australia ($1=A$1.30)

[This message was distributed via the east-timor news list. Write info@etan.org.]