Subject: HeraldSun: Bayu Undan delays hit East Timor
Bayu Undan delays hit East Timor By Nigel Wilson 06dec03
PRODUCTION from the Bayu Undan gas recycling project in the Timor Sea has been delayed at least eight months with implications for East Timor's revenues running into millions of dollars.
And the production postponement could hit Santos, the only Australian participant, because of a later contribution to its income from its 10.64 per cent stake.
Bayu-Undan lies in the Timor Sea, 500km off Darwin and 250km south of East Timor.
Darwin area manager of project operator ConocoPhillips, Blair Murphy, yesterday confirmed the estimated start of full commercial production from the field had been delayed from April next year until November.
He said the timetable had been affected by construction and delivery delays in both the Bayu production platforms and the floating production storage and offtake vessel.
Mr Murphy added that while there had been technical difficulties with two of the initial production wells being drilled on the field, more recently two other wells had come in better than expected.
This meant the drilling program was back on schedule.
The $US1.64 billion ($2.22 billion) project will involve the production and processing of wet gas, the separation and storage of condensate, propane and butane, and the reinjection of dry natural gas back into the Bayu Undan reservoir.
A paper presented to a meeting of East Timor donors in Dili this week said the delay meant ConocoPhillips' product profile for 2004 showed a decrease in liquids production from 22 million to 12 million barrels.
This is only about one third of the production estimate of 33 million barrels that was anticipated in 2001 when ConocoPhillips signed an agreement covering Bayu Undan development with the East Timor administration.
The paper said this would result in a significant decline in the estimates of payments to the East Timor Government.
"While the projected Timor Sea oil and/or gas revenues for 2005-06 and 2006-07 have been significantly reduced, the revenue estimates for subsequent years have remained broadly unchanged," it said.
The major reductions in revenues will fall mostly in the next four years.
East Timor received $US26.4 million in revenue from the Timor Sea in financial year 2002, but this is estimated to drop to $US17.1 million this year, to $US9.7 million in 2004-05 and to $US7.7 million in 2005-06 before increasing to $US28.8 million in 2006-07.
Over the same period, East Timor's budget rises from $US24.6 million to $57.5 million.
Most of East Timor's current income comes from the small Elang Kakatua field which are projected to be shut down by the end of next year though high international crude oil prices may make it economical to extend the field's life.