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Woodside plans for Greater Sunrise project stymied by E. Timor government

LNG Industry,

East Timor has stated it does not want Woodside Petroleum to process gas from the Greater Sunrise gas field in Darwin or on an FLNG terminal, but instead is proposing that the gas be processed at a terminal on East Timor’s coast. Woodside have opposed it on the grounds that it is not feasible.

Woodside does not believe it is feasible to build the terminal on East Timor’s shores, on the grounds of the technical difficulties and high cost involved in building an underwater pipeline over a deep ocean trench. But the East Timor government is digging in its heels and pushing for an East Timorese terminal. It seems to be a case of conflicting interest as the field sits jointly in Australian and Timorese waters, also the Timor Sea Treaty, signed in 2007, dictates that any development of the Sunrise field must be done with the approval of both governments, royalties are also divided in a 90:10 split between East Timor and Australia.

The field is estimated to hold some 5.4 trillion ft3 of gas though and 226 million barrels of condensate, so the stakes are high. Agio Pereira, a government spokesman said, “The country is firmly committed to building an onshore petroleum industry, inclusive of a pipeline to Timor-Leste from the Greater Sunrise field.” He went on to say, “We must not forget that the floating LNG is a new option and Timor-Leste should think about whether we want to be part of this guinea pig experiment.” With so much at stake it is no wonder that the East Timor government has entrenched itself, the development of the onland terminal for the gas field could be worth billions of dollars for the Timor government and local contractors.

However Woodside has stated that they will reach a decision between their partners, who include ConocoPhillips, Shell an Osaka Gas very soon. They too have a major vested interest in the project, as it is one of three large projects they are currently pursuing to ensure their future growth, and need to get things moving quickly. On Thursday, East Timor’s Secretary of State for Natural resources. Alfred Pires said that studies showed that the onland terminal was viable. So it looks like the situation will not be resolved easily, and the two governments may need to come together to get things moving as the Timor Sea Treaty expires in 2013.

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