Subject: Woodside to work with 'disappointed' Timor-Leste on Sunrise gas

also East Timor denies progress on Woodside Sunrise LNG

Woodside to work with 'disappointed' Timor-Leste on Sunrise gas

Sydney (Platts)--24May2010/325 am EDT/725 GMT

Woodside Petroleum is planning to work with the government of Timor-Leste to progress the development of the Sunrise gas field in the Timor Sea, the company's CEO and managing director Don Voelte said Friday at a business lunch in Sydney.

"Sunrise is going quite well," Voelte said in response to queries about Timor-Leste's negative reaction to the decision to pursue a floating LNG project, rather than an onshore plant in the impoverished new nation, as favored by Dili.

Sunrise straddles the Timor Sea's Joint Petroleum Development Area between Australia and Timor-Leste and is jointly administered by the two countries under the Treaty on Certain Maritime Arrangements in the Timor Sea and an international unitization agreement, ratified in February 2007.

The field development plan requires approval by both governments, but Dili has repeatedly stated that the only option it would back was an onshore plant in Timor-Leste.

Under the CMATS treaty, Australia and Timor-Leste will split revenues from Sunrise on a 50:50 basis, instead of the 10:90 split for other developments in the JPDA.

The IUA requires the Sunrise partners to develop the Greater Sunrise fields to best commercial advantage, consistent with good oilfield practice.

Sunrise is 33.44% owned and operated Woodside, alongside partners ConocoPhillips (30%), Shell (26.56%) and Osaka Gas (10%).

The joint venturers have spent $400 million appraising the field and conducting final evaluations of two development options -- a floating 4 million mt/year LNG project at the field using Shell technology; or piping the gas 500 km (310 miles) to the northern Australian city of Darwin for processing at a 5 million mt/year production train, to be built at the existing ConocoPhillips LNG plant at Wickham Point.

The decision to go with an FLNG project was unveiled by Woodside in April and immediately drew criticism from Timor-Leste.

The plan has now been officially lodged in both Australia and Timor-Leste, Voelte told the lunch, sponsored by the American Chamber of Commerce.

"There's disappointment [in Timor-Leste] that has to be dissipated at this point," he said. "But we plan to work with them and plan to get something that's the best answer for both countries."

Voelte said that technically, all three development options were possible. "But economically we were prescribed under the treaty signed by both countries that we had to pick the best commercial option using good oilfield practice," he added.

"The Timor option was a very expensive option and didn't provide the maximum money to the governments of Timor-Leste and Australia," Voelte said.

"We've come up with a great project that financially is extremely strong ... It's a very strong liquids project and it provides more revenue than any other option to both Timor-Leste and Australia: over the life of the project -- $13 billion to Australia as a minimum and $13 billion to Timor-Leste as a minimum ... [that] will do a lot of things for Timor-Leste."

The Greater Sunrise fields, which include the Sunrise and Troubadour discoveries, have a total contingent dry gas resource of 5.13 Tcf and 225.9 million barrels of condensate.

Meanwhile, Woodside remains on track to make a final investment decision on the expansion of its Pluto LNG project in Western Australia at the end of this year, Voelte said.

The company is currently nearing completion of the A$13 billion ($10.8 billion) phase one project at Pluto, which is scheduled to produce first LNG from its 4.3 million mt/year plant in early 2011.

"We've previously advised we are targeting a final investment decision for train two at the end of this year and the ultimate [aim] would be to sanction train two and three at the same time," Voelte said. "We ultimately see up to five trains at Pluto."

The company is in the middle of a 20-well exploration program on Australia's North West Shelf, aimed at finding new gas resources to supply Pluto trains two and three. Of the six wells drilled so far, four have been successful, Voelte said.

"The next three or four wells are going to be very, very telling to us," Voelte said, adding that more information would be available at the time of the company's half-year results in August. "At the same time, we are talking to other companies and looking for other people's gas coming through the plant," he said.

Woodside owns 90% of Pluto phase one, and its Japanese LNG customers Tokyo Gas and Kansai Electric hold 10%. "It's possible that Woodside's equity interest in subsequent trains may not be maintained at 90%," Voelte added.

--Christine Forster,


East Timor denies progress on Woodside Sunrise LNG

Reuters - Wednesday, May 26

PERTH, May 26 - Australia's Woodside Petroleum <WPL.AX> has not successfully lodged a proposal to East Timor's government to develop the Sunrise gas project using a floating liquefaction plant, the tiny nation's petroleum regulator said.

Woodside said on Friday it had already submitted a proposal, but East Timor's National Petroleum Authority said the firm and its partners had failed to provide feasibility studies of all other development options, including an onshore facility in East Timor.

"Accordingly, a lodgement would title a formal receipt document issued by the National Petroleum Authority , which was not and has not been issued," Gualdino Da Silva, President of ANP, said in a statement issued late on Tuesday.

Woodside officials could not immediately be reached for commment.

Greater Sunrise - the largest known petroleum resource in the Timor Sea -- straddles the waters of East Timor and Australia and hold 5.13 trillion cubic feet of gas as well as 300 million barrels of valuable condensate.

Dili has insisted that the gas should be piped and processed onshore, in a bid to create its own petroleum industry and create jobs for the impoverished nation.

Partners in the Greater Sunrise field are U.S. major ConocoPhillips <COP.N>, Shell <RDSa.L> and Japan's Osaka Gas <9532.T>.

Australia and East Timor reached a deal four years ago to evenly split billions of dollars of field royalties, but East Timor's President Jose Ramos-Horta had wanted jobs from processing to be based in the impoverished country.

Woodside has said the East Timor government's opposition to its development plan was premature, arguing that the floating LNG plan was the most compelling and would bring more revenue to the citizens of East Timor than any other option.


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