Subject: ABC: Legislation backlog stopped Timor treaty ratification: Govt

Also: Timor Sea Treaty Needed Soon for Big Gas Projects to Proceed

Legislation backlog stopped Timor treaty ratification: Govt ABC Online Thu, Dec 19 2002 7:53 AM AEDT

The Federal Government says the volume of legislation to be processed in Parliament this month made it impossible to ratify the Timor Sea Treaty.

The East Timor Parliament last night ratified the treaty with Australia on oil and gas reserves before the agreed December 31 deadline.

Resources Minister Ian Macfarlane says the treaty has been introduced into Federal Parliament but a record 27 hour final day of sittings for the year made it difficult to pass all bills before it.

"The deadline was set as the target on a best endeavours basis and we obviously want to move forward on both the issues, but in the end the ratification of the treaty proved impossible on a legislative basis simply because there wasn't enough time to get the legislation through the house," he said.

Timor Sea Treaty Needed Soon for Big Gas Projects to Proceed

Oil Daily, Incorporating Energy Alert 12/18/2002 04:05:52

Negotiators from Australia and East Timor met in Darwin Monday to begin a last-ditch effort to sign the Timor Sea Treaty -- and free up billions of badly needed dollars from gas revenues for East Timor. US major ConocoPhillips, for one, is calling for agreement soon, to avoid delays to key projects.

Bitter words continued last week as East Timorese politicians said Canberra was refusing to ratify the agreement -- which would enable joint development of reserves in the Timor Gap area -- unless the newly sovereign East Timor relinquished its claims to other major deposits in the disputed area, a move that East Timor believes forfeits its future economic prospects.

Observers say Australia can play hardball with its neighbor because it can afford to be patient -- while East Timor badly needs gas revenues to mollify restive citizens. There have been violent protests against the government's failure to alleviate widespread unemployment.

Ratification of the treaty is needed before development of Bayu-Undan gas reserves can advance, which would deliver an estimated $3 billion in revenues to East Timor over a 20- year period.

A spokesman for ConocoPhillips in Australia told International Oil Daily that time is running out to ratify the agreement. "We have agreement to begin delivering the first [liquefied natural gas] cargo to Tokyo Electric and Tokyo Gas in January 2006, and 36 months are needed to complete the pipeline [to Darwin] and finish the LNG plant [in Darwin]," said Blair Murphy of ConocoPhillips. "We're drilling right now and it's going well, but if a deal isn't signed there's going to be pressure on our timetable. We need to start construction soon."

Australian officials have said they expect the Timor Sea Treaty to be signed by the end of this year, but the Australian Parliament has now adjourned for the year, as East Timorese officials fret that further delay could imperil development work.

If a deal isn't signed by March, then the agreement signed by ConocoPhillips with the Japanese companies -- which are slated to take the entire production from Bayu-Undan -- would become null and void.

The main stumbling block concerns ownership of a second gas field, the bigger and richer Greater Sunrise. Australia is proposing that East Timor receive 90% of revenues from the 20% of the Sunrise field that lies in the disputed Timor Gap, the same sharing formula that applies to Bayu-Undan. The Australians insist that all reserves lying outside the zone belong to Australia, a notion that East Timor disputes.

The two sides were to have the dispute settled by the International Court of Justice in The Hague, the Netherlands, but Australia unilaterally withdrew from the proceedings.

Now, East Timor feels that Australia will not ratify the treaty until it drops its claims to resources lying outside the zone.

Depending on how the dispute is resolved, East Timor could lay claim to most of Greater Sunrise since the bulk of the field would be within its 200-kilometer exclusion zone. Australia claims the Sunrise field is a part of its continental shelf.

Last week, a spokesman for East Timor said that Australia was refusing to budge on its claim for Sunrise as it feared this would force it to renegotiate its maritime boundary with nearby Indonesia.

Meanwhile, ConocoPhillips says it is willing to revisit all avenues on how best to develop gas at Greater Sunrise when the project finally comes into play, following earlier disagreements with partners Royal Dutch/Shell, Australia's Woodside Petroleum, and Osaka Gas. Shell and Woodside favor a floating liquefied natural gas plant, while ConocoPhillips, with strong backing from the government of Australia's Northern Territories, prefers piping gas to Darwin for processing there.

"We're willing to look at all options," said ConocoPhillips' Murphy, adding that "markets continually change."

He said that "all four parties are committed to monetizing the assets," and that ConocoPhillips "just wants to maximize shareholder value. If this means the floating LNG platform is the most economical, then fine.". James Irwin


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