Subject: East Timor says optimistic on site of LNG plant

East Timor says optimistic on site of LNG plant

Wed Mar 4, 2009 11:52am GMT

By Tito Belo

DILI, March 4 (Reuters) - East Timor is optimistic that an LNG plant worth up to $10 billion could be located in the tiny nation, based on the early findings of a new study on a pipeline to the Greater Sunrise gas field, the energy minister said on Wednesday.

East Timor, regarded as Asia's poorest country, has been pushing to have the liquefied natural gas export terminal built on its shores to boost its local economy.

But last year, Woodside Petroleum Ltd (<>WPL.AX), Australia's second-largest oil and gas producer, ruled out building the plant in East Timor to process gas from the field in the Timor Sea, arguing a pipeline would be too expensive and risky to build.

The study also involves Malaysia's state-owned oil firm Petronas.

"We are still waiting for the next phase of the survey but the first phase encourages the government and Petronas to start discussing how to finance the LNG project," energy minister Alfredo Pires told Reuters after a meeting with Hassan Marican, head of Petronas, and Prime Minister Xanana Gusmao.

The three met to discuss the initial findings on a technical survey on the feasibility of a pipeline.

Pires estimated that the LNG plant could cost $8-$10 billion and said a South Korean consortium was lined up to buy the gas.

"The meeting today was to present the report of the study that has been jointly conducted between the government of Timor Leste (East Timor) and ourselves on the feasibility of landing the gas into Timor Leste," said Marican, adding that the initial study appeared to confirm it was feasible despite the sea depth.

Woodside has previously said that building the LNG plant in East Timor would require building a 184 km (114 miles) pipeline that would have to cross a 3 km deep trench, which Woodside said was too risky and expensive.

The company later said, however, it was considering a floating LNG project in East Timorese waters to avoid the potential costs under Australia's proposed carbon trading scheme.

The Greater Sunrise fields, which lie in the Timor Sea about 450 km northwest of Darwin, straddle the boundary of the Joint Petroleum Development Area of the Timor Sea.

Development of the Greater Sunrise fields, discovered in the 1970s, was frozen in 2004 because of differences between Australia and East Timor about the revenue split from oil and gas reserves beneath the sea that divides them.

But the LNG project was revived after East Timor's parliament ratified a pact with Australia two years ago, to evenly split royalties from the field, estimated to hold 8 trillion cubic feet (tcf) of gas and up to 300 million barrels of condensate.

Woodside, operator of the Sunrise LNG project with a 33.4 percent stake, said it plans to make a decision on the development plan of the field in the first half of 2009 and move towards a final investment decision later in the year. Partners include ConocoPhillips, Royal Dutch Shell (<> RDSa.L) and Osaka Gas (<> 9532.T), holding 30 percent, 26.56 percent and 10 percent interest respectively. (Editing by Muklis Ali and Ed Davies)

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