Sunrise stalemate continues

AFTER two years of debate, Australian oil and gas company Woodside and the East Timor (Timor-Leste) Government remain at odds on the development of the Greater Sunrise gas and condensate
The ongoing dispute concerns the development of the Sunrise and Troubadour fields, known collectively as the Greater Sunrise fields, which were discovered in the Timor Sea, about 150km from Timor-Leste and 450km from Darwin, in 1974.
The fields are estimated to contain 5.1 trillion cubic feet of LNG and 226 million barrels of condensate. The question of where to process the natural gas has been a point of difference between the two parties since 2010, when Woodside announced that a floating LNG (FLNG) platform was the unanimous choice of the Sunrise joint venture (SJV).
About 80 per cent of the Greater Sunrise fields lie within an area of exclusive Australian jurisdiction, with the remaining 20 per cent part of the Joint Petroleum Development Area (JPDA).
The JDPA was established by the Australian and Timorese Governments in 2003 as part of the Timor Sea Treaty (TST), an interim agreement aimed at facilitating oil and gas development despite an ongoing dispute between the two countries regarding maritime boundaries.
The TST stated that any deposit extending beyond the boundary of the JPDA would be developed “as a single entity for management and development purposes”, preventing either country from independently developing any overlapping fields.
A further treaty, Certain Maritime Arrangements in the Timor Sea (CMATS), was signed by then-Australian Foreign Affairs minister Alexander Downer and then-Timorese President Jose Ramos-Horta in 2006.
CMATS enabled international companies to proceed with petroleum projects without resolving the issue of maritime boundaries.
Following ratification of the CMATS treaty, Woodside (33.4 per cent interest) and its joint venture partners ConocoPhillips (30 per cent), Shell (26.6 per cent) and Osaka Gas (10 per cent) began work on the SJV.
Woodside produced a media release announcing its preferred processing option in April 2010, and chief executive Don Voelte explained that the decision would bring the most benefit to the Timorese people.
“We expect that the selection of a floating LNG processing option will, in addition to generating significant long-term petroleum revenue, provide a broad range of social investment, employment and training opportunities for Timor-Leste,” he said.
However the proposed option was strongly opposed by the Timor-Leste Government, which quickly responded with a media release of its own.
“While Woodside and its joint venture partners have announced their preferred development option for the Greater Sunrise gas field, a proposed floating LNG, Timor-Leste confirms it will not accept or endorse this concept and its associated plan now or in the future,” the statement read.
“The floating LNG concept for Greater Sunrise is neither in the best interests of the people of Timor-Leste nor technically and commercially sensible.
“Woodside was acutely aware of the Government’s position before today’s announcement but chose to proceed regardless. This is not only a source of great concern, but reflects an unacceptable level of arrogance.”
The stalemate continued throughout 2011, with Woodside’s new chief executive Peter Coleman reiterating the company’s stance on the issue, and Timor-Leste standing by its commitment to a pipeline and onshore plant.
In an interview with ABC Radio Australia in September this year, Timorese Petroleum and Mineral Resources minister Alfredo Pires maintained his Government’s opposition to Woodside’s FLNG proposal.
With a pipeline from the Bayu-Undan field in the JPDA already running to an onshore plant in Darwin, Mr Pires said it was time Timor-Leste received equal
“We have given one pipeline to Australia: it has gone from Darwin to Bayu-Undan so we feel it’s only fair that the other one comes to Timor-Leste for us to enjoy those benefits,” he said. “We are not trying to convince Woodside: it is Woodside that has to convince us. “We’ve made our views very clear on this one and I can assure you we’re not going back on it.”
If a Sunrise development plan has not been approved by both Timor-Leste and Australia by February 2013, either country may cancel most of the CMATS treaty provisions.
With the 2013 deadline looming, Mr Pires confirmed that the Timor-Leste Government would use its power of veto to postpone the project indefinitely. “What we have said five years ago [is that] if the pipeline is not coming directly to Timor-Leste, let’s just leave it for future generations and let them solve it then,” he said.

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