| Subject: Australia's Downer Says New Timor
Gap Pact Like Old One
Dow Jones Newswires June 14, 2001 Australia's Downer Says New Timor Gap Pact Like Old One CANBERRA -- A treaty between Australia and East Timor covering royalty sharing from energy production in the Timor Sea won't look dramatically different from a similar but now defunct agreement between Australia and Indonesia, Foreign Minister Alexander Downer said Thursday. He also said the siting of land-based infrastructure for the major energy developments planned in the Timor Sea is a decision for energy companies and won't involve the government. A number of projects with billions of dollars investment have already been proposed for the northern Australian city of Darwin, including a liquefied natural gas plant and a methanol plant. In addition, two proposals have been outlined that would involve building multibillion dollar pipelines to pump Timor Sea gas from Darwin into southern and eastern Australia. No similar developments have been proposed for East Timor. Sharing the benefits of energy production in the 75,000-square-kilometer area was covered by the 1989 Timor Gap Treaty between Australia and Indonesia. But this lapsed when Indonesia formally withdrew after East Timor's August 1999 vote for independence from Indonesia. Downer was speaking to reporters after addressing a Donor's Meeting on East Timor in Australia, which brought together many representatives of United Nations' agencies, Australian and foreign governments, and non-government aid organizations. "What we hope to be able to conclude and sign very soon is a framework agreement which outlines how the Timor Sea will be managed between Australia and East Timor, particularly in the area called the zone of cooperation," he said. Signing such an agreement could clear the way for billions of dollars of investment in energy projects proposed for the region. The framework agreement will state the responsibilities of Australia and East Timor, revenue sharing and royalty arrangements and boundaries, he said. Almost all the work on the framework agreement has been completed and outstanding issues will be resolved fairly quickly, he said. Downer didn't want to provide details of the new agreement. "It's not going to look dramatically different from the old agreement but there will be differences," he said. Asked about economic benefits arising from the siting of land-based infrastructure, Downer said these are issues for oil and gas industry participants, not for governments. "These are private sector investments and developments and they have got to be profitable," he said. "If they're not going to be profitable...they're not going to happen." "The companies themselves obviously have to make judgments about how best they structure their particular projects." Earlier, Downer told the conference he believes a framework agreement will be endorsed early in July and this "will provide the security investors need to proceed with planned investments." The size of the revenue flows from energy developments is speculative, but East Timor likely will receive a significant revenue stream, he said. Recent media reports indicate East Timor could receive up to 90% of royalties from oil and gas production in the sea, while Australia would receive 10%. Such an agreement could yield up to US$1 billion in revenue for East Timor, according to the reports. The major development under way now in the Timor Sea is a US$1.6 billion Bayu-Undan liquids stripping and gas recycling project operated by Phillips Petroleum Co. (P). A second stage of this project could involve a development with Royal Dutch/Shell Group (RD), Woodside Petroleum Ltd. (A.WPL), Santos Ltd. (STOSY) and Japan's Osaka Gas Ltd. (J.OSG) to jointly run an undersea gas pipe to Darwin linking the various gas resources in the Timor Sea. If this eventuates, it could lead to a number of proposed downstream developments in Darwin. Methanex Corp. (MEOH), the world's largest methanol producer, plans to build a A$1.5 billion synthetic gas plant in Darwin. El Paso Corp. (EPG) has signed a letter of intent with Phillips to purchase liquefied natural gas from a new 4.8 million-metric-ton-a-year plant to be built by Phillips in Darwin. Epic Energy plans to build a A$1.5 billion, 2,000-kilometer natural gas pipeline south from Darwin to connect with a major central Australian gas hub at Moomba. Epic Energy is one-third owned by El Paso,one-third by Dominion Resources Inc., both U.S.-based concerns, with three Australian companies each holding an 11% stake. Australian Pipeline Trust Ltd. (A.APA) also plans to build a A$2.4 billion pipeline across northern and central Australia to take Timor Sea and possibly Papua New Guinea natural gas to join existing pipelines serving the populated eastern parts of the country. Major shareholders in the trust include Australian Gas Light Co. (A.AGL) with 30% and Malaysia's Petroliam Nasional Bhd. (P.PET), or Petronas, with 10%. -By Ray Brindal, Dow Jones Newswires; 612-6208-0902; ray.brindal@dowjones.com June Menu Note: For those who would like to fax "the powers that be" - CallCenter is a Native 32-bit Voice Telephony software application integrated with fax and data communications... and it's free of charge! Download from http://www.v3inc.com/ |