Subject: Australia wants Sunrise IUA before ratifying Timor Sea Treaty

Australia wants Sunrise IUA before ratifying Timor Sea Treaty

Sydney (Platts)--5Feb2003

The Australian federal government is not planning to ratify the new Timor Sea Treaty with East Timor until an international unitization agreement over the Sunrise gas field has been settled, a spokeswoman for Resources Minister Ian Macfarlane said Thursday. "They [bureaucratic level negotiators] are concentrating on the unitization agreement at the moment," she said. "It has got down to the numbers stage." The new Timor Sea Treaty carves up revenues from projects in the Joint Petroleum Development Area on a 90:10 basis between East Timor and Australia. The treaty was signed on May 20, 2002, at which time both governments gave undertakings that it would be ratified by Dec 31. The two nations also pledged to finalize the unitization agreement over Sunrise, which lies partly in the JPDA.

The last meeting between the two sides was held about two weeks ago and although the unitization agreement is "all but done", the negotiators are currently re-working the figures, Macfarlane's spokeswoman said. "They are trying to find a compromise." The Australian government's stance that the unitization agreement should be concluded before or prior to its ratification of the Timor Sea Treaty is at odds with the position of East Timor, which ratified the pact on Dec 17. It has also placed pressure on ConocoPhillips' timetable for a planned A$3-bil ($1.8-bil) LNG project at the Bayu-Undan field, which lies wholly within the JPDA. ConocoPhillips requires Australia's ratification of the treaty to enable it to progress the LNG project towards a January 2006 production startup.

ConocoPhillips' timetable is geared towards meeting the scheduled start of contracts it has signed to supply Bayu-Undan LNG to Japan's Tokyo Electric Power and Tokyo Gas. According to Macfarlane's spokeswoman: "Both fields [Sunrise and Bayu-Undan] are equally important." A spokesman for ConocoPhillips was not immediately available for comment. Bayu-Undan is 58.6% held by ConocoPhillips with partners Santos (11.8%), Inpex (11.7%), Kerr-McGee (11.2%) and Agip (6.7%). A $1.5-bil liquids stripping project, the fiscal terms for which are already agreed, is currently under development at Bayu-Undan and is scheduled to begin producing around 100,000 b/d in early 2004. The undeveloped Sunrise field is owned by Woodside (33.44%), Shell (26.56%), ConocoPhillips (30%) and Osaka Gas (10%).

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