The Age

Argument over pipeline clouds Timor gas deal

DANIEL FLITTON

November 26, 2009

EAST Timor has warned it will abandon a multibillion-dollar deal with Australia to exploit natural gas fields in the Timor Sea unless a pipeline is built to deliver the bounty directly to the impoverished nation.

Francisco da Costa Monteiro, special adviser to East Timor's secretary of state for natural resources, flew into Canberra yesterday for talks with federal Resources Minister Martin Ferguson in an attempt to break the impasse.

East Timor wants gas from the Greater Sunrise project to be piped about 200 kilometres to East Timor's southern coastline, with a plant to be built for processing.

A consortium led by resources company Woodside will develop the project.

But Woodside has ruled the proposal too expensive, preferring to examine plans for a floating plant above the field or piping the gas some 500 kilometres to Darwin.

The value of the Sunrise gas field is estimated at more than $50 billion.

Woodside senior vice-president Jon Ozturgut this week told investors a decision on where to process the gas would be announced by the end of the year.

But Mr Da Costa said the Government in Dili would not accept sending the gas abroad and accused Woodside of ignoring the interests of the Timorese people.

''For us, the best outcome is development of Greater Sunrise on the shores of Timor Leste that can underpin the overall economic and social development of the country,'' he told The Age.

Mr Da Costa said establishing the project was expected to cost $8 billion to $10 billion and that investment would drive the development of other services in the country of 1 million. ''That's the reason why we see that for Australia this is one drop in a big ocean, but for Timor Leste this is almost the single biggest [project] and you can imagine how much attention we put into this,'' he said.

A spokesman for Mr Ferguson issued a statement saying the destination of the pipeline was a commercial matter to be determined by the project partners.

But Mr Da Costa said that under the terms of various treaties dividing the oil and gas fields between Australia and East Timor, the two governments should be left alone to decide how to develop the fields.

He said East Timor was willing to leave the resources in the ground for future generations rather than rushing into a deal. Resources companies from China and Malaysia have recently been invited to examine the Greater Sunrise field.

''They should start to realise that Timor today is very different from Timor in 2002 and 1999 or before,'' Mr Da Costa said.

He pointed out that East Timor's substantial national savings from other resource projects came to a total of more than $5 billion.

''If it's [Great Sunrise] to be developed, then it's to be developed to Timor Leste,'' he said.

''If it's not coming to Timor Leste, then we will not approve anything.''

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