Subject: East Timor to block proposed oil development plan from Australia's Woodside

also East Timor 'Required' to Develop Sunrise LNG Project

East Timor to block proposed oil development plan from Australia's Woodside

By ANTHONY DEUTSCH Associated Press Writer

JAKARTA, Jan 13 (AP) - East Timor's government will block proposals by an Australian-led consortium to develop a disputed oil and gas field worth billions of dollars, The Associated Press has learned.

Proposals to exploit "Greater Sunrise" -- estimated to hold 240 million barrels of light oil and 5.4 trillion cubic feet (154 billion cubic meters) of natural gas -- must be approved by both sides, a 2007 treaty between the neighbors states.

The deal gives the parties until 2013 to agree upon a joint development plan. But Timor's latest position shoots down all proposals put forward so far by the consortium headed by Australian oil and gas company Woodside Petroleum Ltd.

Timor is already tapping a $5 billion petroleum fund established with income from another field in the Timor Sea, but the vastly larger Greater Sunrise is seen as key to developing the young democracy and lifting its 1.1 million people out of poverty.

In their toughest stance to date, Timor says it will not support Woodside's development plan, possibly rendering the 2007 treaty meaningless.

"The current proposed plans of Woodside and the consortium partners to pipe gas from the Greater Sunrise field to either Darwin or a floating LNG (liquid natural gas plant) would not be approved by the government," Secretary of State Agio Pereira said in a statement obtained Wednesday by The Associated Press.

Woodside, which leads the consortium including Royal Dutch/Shell, Osaka Gas and ConocoPhillips, argued that piping the resources to an existing processing plant in Darwin, more than 300 miles (500 kilometers) away, is the most commercially viable option. It has also researched a floating gas processing plant, which would be the first in the world and cost billions of dollars.

But East Timor, an underdeveloped country with no major industry to speak of, wants to run a deep sea pipeline to its coast, about a third of the distance of a pipeline to Darwin in Australia's Northern Territory. It has been looking for commercial partners to develop a multibillion dollar national petrochemical industry that is says would spur economic growth and dent towering unemployment.

With billions of dollars in tax revenue and profits involved, the fight over Greater Sunrise could not be of higher stakes for Timor. The former Portuguese colony broke from Indonesian occupation a decade ago and is struggling to feed, shelter and educate its population.

It ranks among the least developed countries in the world and is the poorest in Southeast asia.

While it is now relatively stable, Timor, also known as Timor Leste, has been wracked by violence and political upheaval in recent years.

Australia, seeking to maintain regional stability, rushed troops to Timor in 2006 amid deadly battles between rival police and army forces. In 2008, President Jose Ramos-Horta was shot and nearly killed by rebels.

The potential windfall from oil and gas could help rebuild a nation that has been devastated by centuries of foreign rule that wiped out a third of the population, but there is also the risk of creating inequality and local discontent that has plagued other oil-rich nations.

"While the government will continue to act in good faith with our partners; the decision for development of Greater Sunrise will not be left to the discretion of Woodside's executives," Pereira said.

The latest of three treaties on the Timor Sea was signed with Australia in 2007. The Certain Maritime Arrangements in the Timor Sea or CMATS, stated that revenue from Greater Sunrise would be split equally. But the deal will be "terminated" if a joint development plan is not agreed upon in seven years or petroleum production does not commence within 10 years, it says.

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East Timor 'Required' to Develop Sunrise LNG Project

By Jason Scott and Dinakar Sethuraman

Jan. 13 (Bloomberg) -- <http://www.bloomberg.com/apps/quote?ticker=WPL%3AAU> Woodside Petroleum Ltd. said Australia, East Timor and partners of the Sunrise liquefied natural gas project are "required to develop the reservoir" as part of an agreement.

"Under the International Unitisation Agreement, the governments of Australia and Timor Leste and the Sunrise joint venture participants are required to develop the reservoir to the best commercial advantage," Woodside's spokeswoman Yvonne Ball said in an e-mail today.

East Timor will block Woodside's plans to develop the Sunrise LNG plant, the Associated Press reported, citing a statement from Secretary of State Agio Pereira. Plans to either pipe the gas to Darwin or process the fuel using floating LNG technology won't be approved by the government, according to the report published on the Sydney Morning Herald Web site. Telephone calls to Pereira's office were not answered.

Woodside and its partners in Sunrise, which include Royal Dutch Shell Plc and ConocoPhillips, are deciding "a development theme selection that will accord with key treaty requirements," Ball said.

Australia and East Timor completed a treaty in 2007 for the administration of the Sunrise field, which straddles a boundary between Australian waters and an area jointly managed by the two countries. The countries agreed to share royalties.

Woodside owns about 33 percent of Sunrise and is the operator, while Houston-based ConocoPhillips has a 30 percent stake. Shell has about 27 percent and Osaka Gas Co. 10 percent.


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