Subject: East Timor pressing ahead with plan to develop oil and gas industry

East Timor pressing ahead with plan to develop oil and gas industry

By ANTHONY DEUTSCH Associated Press Writer

JAKARTA, Sept 10 (AP) - East Timor's government has designated land to be developed into a regional petrochemicals hub, its top resources official said Thursday, in the latest push to bring disputed offshore oil and gas to its coast rather than to Australia.

The neighbors share proceeds from the Bayu Undan field in the Timor Sea, but there is disagreement about a larger, untapped field called Greater Sunrise, which contains about 300 million barrels of light oil and 8.3 trillion cubic feet of natural gas.

It is worth billions of dollars in commercial oil and gas sales and the country that hosts the processing facilities will also generate billions in tax revenue.

East Timor's government has designated three towns in the southern part of the island to build a petrochemical processing plant, liquid natural gas facility and supply center, Alfredo Pires, the country's state secretary for natural resources said Thursday.

"We feel quite strongly that for the people to benefit from these resources they need to be brought to our shores," Pires told The Associated Press in a phone interview.

"The discussions will continue, but we are making our position known...We are not just the stakeholders, we are the owners of these resources," he said.

Pires's comments show the unwavering position of East Timor's leaders and could set the stage for a standoff with a group of oil and gas companies led by Australia's Woodside that could block short term development.

"Our commitment to this project makes it very difficult to reconcile any other agreement," Pires, told an oil conference Thursday in a speech e-mailed to The Associated Press. "The development of Greater Sunrise will either transform our nation on shore or remain a distant dream for all of us."

Woodside and its partners are licensed to develop Greater Sunrise and want to build a 530-kilometer pipeline running south to Darwin, where ConocoPhillips has built a $5 billion natural gas processing plant.

The group argues that technical studies concluded processing the resources in Australia is more commercially viable.

"It is possible to build a subsea pipeline from the Greater Sunrise reservoir to onshore Timor Leste, (but) it carries significant technical, cost and schedule risks," Woodside said in a statement Thursday, using the country official name.

The studies concluded that a floating liquid natural gas facility or a pipeline to Darwin are "the best commercial and technical development options for Sunrise," it said.

But Timor sees the resources as key to lifting its 1.1 million people out of poverty, by stimulating the local economy and creating jobs. The nation has no major industry and unemployment is more than 30 percent.

East Timor has around $5 billion in a petroleum fund that can be used to build infrastructure such as roads, ports and a power plant. But it is seeking outside funding of up to $10 billion to create the petrochemicals industry, Pires said in the AP interview. He said discussions are ongoing with several companies, but provided no names.

Under a current agreement, neither party can develop Greater Sunrise unilaterally.

Timor became Asia's youngest democracy just six years ago after centuries of colonization, but faces challenges from decaying infrastructure and poor health, with roughly half the population living below the poverty line.

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