Subject: E. Timor Debates US$3-Billion Gas Treaty As Deadline Looms

Received from Joyo Indonesia News

Also: ET Government submits Timor Gap treaty to parliament

Dow Jones Newswires November 25, 2002

East Timor Debates Gas Treaty As Deadline Looms


MELBOURNE -- East Timor's parliament Monday began debating the ratification of the Timor Sea Treaty with Australia, with agreement from the world's newest nation needed to allow the development of billions of dollars worth of offshore gas.

Both countries need to ratify the treaty by the end of the year if U.S.-based oil and gas major ConocoPhillips (COP) is to make its deadline for developing a liquefied natural gas operation based on its Bayu-Undan field.

Any delay could put at risk ConocoPhillip's contracts to start supplying LNG to customers by January 2006.

But while both countries have committed to signing the treaty by Dec. 31, Australia and East Timor remain at loggerheads on finalizing a separate agreement on the development of the larger Greater Sunrise fields.

Australia wants to sew up the contentious Sunrise agreement before ratifying the Timor Sea Treaty, causing some frustration in both East Timor and at ConocoPhillips.

Negotiations on the so-called Greater Sunrise International Unitization Agreement are at a crossroads, people close to the talks told Dow Jones Newswires. Both sides disagree on some issues that could have a bearing on future talks between the two countries on their maritime boundary, the people said.

The Timor Sea Treaty sets out the terms for exploiting oil and gas reserves in the Joint Petroleum Development Area of the Timor Sea in which East Timor has a 90% entitlement and Australia has 10%.

Under current maritime boundaries, only 20% of Greater Sunrise fields lie in the JPDA, with the rest being in Australian waters. But the newly-independent East Timor is claiming a maritime boundary with Australia that would potentially take in all of Greater Sunrise.

While both sides have agreed to sign the Timor Sea Treaty using current boundaries so as to allow gas developments to go ahead, the treaty won't prejudice any future boundary talks.

Bayu-Undan is wholly located within the JDPA and is located about 500 kilometers northwest of Darwin in Australia's Northern Territory, and 250 kilometers south of Suai in East Timor.

ConocoPhillips has already committed to a US$1.8 billion Stage 1 development of the field under which it will produce gas liquids from the fourth quarter of 2003. But the main project is in the Stage II development that will involve piping Bayu-Undan gas ashore to Darwin for processing into LNG for export to Asia.

It is estimated that Bayu-Undan will provide around US$3 billion worth of benefits to poverty-stricken East Timor over the project's 17 year life.

The field is estimated to host as much as 3.4 trillion cubic feet of gas and 400 million barrels of gas liquids.

Wary of the tight timetable, ConocoPhillips has already started work on access roads at the site of the proposed LNG plant, though formal company approval still depends on ratification the Timor Sea Treaty.

East Timor says ratification is wholly separate and isn't dependent on the Greater Sunrise talks. But earlier this month the Australian parliament's Treaties Committee recommended that Australia use its "best endeavors" to conclude the Greater Sunrise agreement before ratifying the treaty.

In October East Timor Foreign Minister Jose Ramos Horta accused Australia of dragging its feet on ratification. He urged Australia to meet its pledge to ratify the treaty by the end of the year, if need be independently of the Greater Sunrise agreement, an idea previously rejected by Australia's Resources Minister, Ian Macfarlane.

The Timor Sea Treaty was signed by Australia and East Timor when East Timor formally became an independent nation from Indonesia on May 20 this year.

ConocoPhillips has 58.6% of Bayu-Undan and is partnered by Australia's Santos Ltd. (A.STO) with 11.8%, Inpex Corp. with 11.7%, Kerr-McGee Corp. (KMG) with 11.2% and Agip S.P.A. (I.AGI) with 6.7%. But Conoco Phillips has agreed to sell a joint 10.08% stake to Tokyo Electric Power Co. (J.TER) and Tokyo Gas Co. (J.TYG) in a deal that will cut its stake to 48.47%.

The Greater Sunrise fields are estimated to host over US$30 billion of gas with first production expected in 2007 or 2008. Australia's Woodside Petroleum Ltd. (A.WPL) has a 33.4% stake in the fields and is partnered by ConocoPhillips with 30%, Royal Dutch/Shell Group (RD) with 26.6%, and Osaka Gas Co. (J.OSG) with 10%.

The Sunrise joint venture partners are at loggerheads themselves on the best way to develop the fields.

Woodside and Shell want to construct a floating LNG processing plant to supply markets in North America. However Phillips wants to pipe natural gas ashore at Darwin to supply Australian domestic markets.

A final decision on the development option is believed to be one or two weeks away.

-By Andrew Trounson; Dow Jones Newswires; 61-3-9614-2664;


Government submits Timor Gap treaty to parliament Mon Nov 25, 6:32 AM ET

DILI, East Timor - The East Timor government on Monday submitted to Parliament for ratification a treaty with Australia on undersea oil and gas mining.

East Timor and Australia in May signed the Timor Gap Treaty to divide oil and gas revenues from a zone in the Timor Sea between the two countries. Parliament was expected to ratify the treaty before its recess on Dec. 15.

Lawmaker Francisco Miranda Branco of the ruling Fretilin party said Parliament would endorse the accord "for the sake of national interest."

Some opposition lawmakers remain unhappy with the location of a maritime boundary that will affect the country's access to billions of dollars in oil and gas revenues.

Under the pact, East Timor will get 90 percent of revenue from one zone of the field, expected to be worth about 13 billion Australian dollars (US$7.3 billion) over the next 20 years.

But Dili is unhappy that under the treaty, the vast majority of revenues from a new oil field known as Greater Sunrise — reputed to hold the largest reserves in the area — will flow to Canberra, even though it lies only 150 kilometers (90 miles) from East Timor and 400 kilometers (250 miles) from Australia.

Bishop Belo, Nobel winner, resigns as head of East Timor diocese

By John Thavis Catholic News Service

VATICAN CITY (CNS) -- Bishop Carlos Filipe Ximenes Belo, spiritual guide of East Timor's struggle for independence, has resigned as apostolic administrator of the Dili Diocese for reasons of health, the Vatican said.

The Vatican announced Nov. 26 that Pope John Paul II had accepted Bishop Belo's resignation after the prelate repeatedly asked to be relieved of his pastoral duties.

The Nobel Prize-winning prelate said in a statement released in East Timor that he was "suffering from both physical and mental fatigue that will require a long period of recuperation."

Bishop Belo, 54, recently spent three months in Portugal for medical treatment. Sources said the bishop had been treated for stress. He met with the pope privately in late October during his "ad limina" visit to the Vatican, which all heads of dioceses are required to make every five years.

Pope John Paul named Bishop Basilio do Nascimento as apostolic administrator of Dili. Bishop do Nascimento also remains apostolic administrator in the East Timorese Diocese of Bacau.

Bishop Belo had been a vocal defender of human rights under Indonesian occupation and a strong supporter of the independence movement.

After centuries of Portuguese colonial rule, Indonesia invaded East Timor in December 1975 and annexed it the following year. More than 200,000 East Timorese were killed or died of disease or famine during Indonesia's 24-year rule.

Perhaps the watershed event of the resistance movement occurred Feb. 6, 1989, when Bishop Belo wrote to then-U.N. Secretary-General Javier Perez de Cuellar calling for a democratic referendum on whether the East Timorese wanted to remain a part of Indonesia.

"The people of Timor ought to be heard through a plebiscite on their future," Bishop Belo wrote. "In the meantime, we are dying as a people and as a nation."

Bishop Belo helped bring the East Timor independence struggle to the attention of the Vatican and the world, meeting several times with the pope to brief him on the situation.

In 1996, Bishop Belo and Jose Ramos Horta, a prominent independence activist who is now East Timor's foreign minister, were awarded the Nobel Peace Prize for advocating nonviolent resistance to Indonesian rule.

Renewed violence in 1999 sparked international concern and a U.N.-sponsored referendum in which the people of East Timor voted for independence.

Bishops Belo's life was repeatedly threatened by pro-Indonesia militias in the months leading up to the referendum. In the week before the vote, a flier was circulated in Dili: "To the bishop: For now your robe is white. But it will soon be covered in the color of your own blood."

Preceding the vote and in its aftermath, anti-independence militia gangs backed by the Indonesian army went on a rampage, killing up to 2,000 civilians, burning and looting houses and driving 250,000 people from their homes.

After results of the 1999 referendum were announced, Bishop Belo visited Rome following an attack by pro-Indonesian militias on his residence that left more than 30 people dead. The bishop was promoting an effective international peacekeeping force, which was eventually sent to the embattled territory.

After a period of transitional U.N. administration, East Timor gained full independence in May.

Bishop Belo, speaking in New York earlier this year, said independence was bringing "a new consciousness of democratic ideals and a new self-understanding" among the people of East Timor.

But he said that despite the hope and optimism, a harsh reality of East Timor is that most citizens are impoverished, with nearly 60 percent underfed.

"The quality of life for most people is far, very far from what it should be," he said.


11/26/2002 11:14 AM ET

Copyright (c) 2002 Catholic News Service/U.S. Conference of Catholic Bishops

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