|Subject: DJ: Timor Wants ConocoPhillips
Also: AFP- Australia prepares to start work on massive Timor Gap gas project; CNN- Gas deal boosts East Timor outlook
INTERVIEW: East Timor Wants ConocoPhillips Bayu-Undan HQ Dow Jones Business News Monday June 16. By Andrew Trounson,
DARWIN -(Dow Jones)- U.S. oil major ConocoPhillips is being lobbied to place in East Timor, or Timor-Leste, the head quarters for its US$1.5 billion Bayu-Undan gas development offshore in the Timor Sea.
"We will invite them to put their headquarters in Timor-Leste for their operations," East Timor's Secretary of State for Investment, Tourism and Environment, Jose Teixeira told Dow Jones Newswires on Monday.
"That would be a tremendous boost for our local economy and we will be actively seeking them to do that," Teixeira said.
The development of Bayu-Undan, offshore of the south of the country in the Timor Sea, is set to provide a massive boost to impoverished East Timor, which has an economy that is largely dependent on aid.
Once production from the liquefied natural gas project starts in 2006, East Timor stands to reap an average US$100 million in annual revenue, more than its current annual budget of US$60 million.
ConocoPhillips' Darwin Vice President Blair Murphy said he wasn't aware of any invitation from East Timor to put the headquarters in Dili.
He noted that ConocoPhillips' regional headquarters is in Perth, Western Australia, which it considers the commercial center for the industry in the region.
Ordinarily, about 200 people work out of the Perth office. However, Murphy said an operating office will be established in Dili but its size has yet to be determined.
ConocoPhillips currently has a helicopter base in East Timor that services the Bayu-Undan fields offshore.
Bayu-Undan is situated in the so-called Joint Petroleum Development Area, or JPDA, of the Timor Sea that is shared been East Timor and Australia.
Under a treaty between the two countries, East Timor is entitled to 90% of the royalties form the area with Australia taking 10%.
While East Timor will earn the lion's share of the revenue, the gas itself is to be piped 500 kilometers to shore in Australia's Northern Territory, which will benefit from the construction of a LNG plant to be built in Darwin.
"We now have the structure for a long-term relationship with the approval of Bayu-Undan, and long term relationships mean that they are to make some commitments to investing as much of their upstream activities as possible in Timor-Leste," East Timor's Teixeira said.
He added the joint fiscal arrangements under the JPDA show that East Timor can offer a stable, investor-friendly regime.
ConocoPhillips "can be confident they can get investment-friendly terms to establish their operations in Timor-Leste," Teixeira said.
The Bayu-Undan joint venturers are ConocoPhillips with 64.14%, Italy's Eni SpA (E) with 12.32%, Australia's Santos Ltd. with 11.83%, and Japan's INPEX with 11.71%. -By Andrew Trounson, Dow Jones Newswires; 61-3-9614-2664; firstname.lastname@example.org
Australia prepares to start work on massive Timor Gap gas project AFP, June 16, 2003
Work will begin immediately on a huge gas project in Australia's tropical north after the 2.3 billion dollar (1.53 billion US) Bayu-Undan development cleared its final hurdle, the project developers said.
International oil giant ConocoPhillips announced that it is ready to begin work on the 1.5 billion dollar, three million-tonne per year Liquefied Natural Gas (LNG) plant in Darwin, after receiving final approval from the project's major players.
ConocoPhillips is to build a pipeline from its Bayu-Undan gas field, about 500 kilometres (310 miles) northwest of Darwin in the Timor Sea, to the Darwin facility, which will supply Japanese customers with LNG for 17 years from 2006.
The Bayu-Undan gas field is estimated to contain a massive 400 million barrels of condensate and liquefied petroleum gas and 3.4 trillion cubic feet of natural gas.
East Timor's 90 percent share of revenues from the operation is expected to help lift the embryonic nation from poverty, reaping an estimated 3.0 US billion dollars in revenue from the project over the next 20 years.
"This landmark approval by the Timor Sea Designated Authority marks a significant event for the further development of reserves in the Timor Sea area," ConocoPhillips president Stephen Brand said.
Although Australia will receive only 10 percent of revenues from the field, it will benefit through increased economic activity and new jobs.
The Northern Territory government has estimated 1,000 jobs will be created during the three-year plant construction phase, with 100 workers needed for the plant's operation.
Darwin will also become the major service and supply hub for the plant and pipeline.
The Bayu-Undan field is in the Joint Petroleum Development Area, with production revenue going 90 percent to East Timor and 10 percent to Australia.
John Ellice-Flint, chief executive officer of Santos which holds an 11.8 percent stake in the project, said the final approvals cleared the way for Santos to make its first entry into the global LNG market.
"This is a significant milestone for Santos and establishes LNG as a new cornerstone contributor to group revenue and earnings," he said.
"The approval also signals the start of an additional gas business for Santos in the Northern Territory and South East Asia."
Santos said the combined liquids and LNG project would add over six million barrels of oil equivalent at peak production -- equal to about 10 percent of Santos' 2002 production.
Gas deal boosts East Timor outlook CNN, Monday, June 16, 2003
SYDNEY, Australia (CNN) -- The fledgling nation of East Timor is likely to get $3 billion in gas and liquids royalties from Timor Sea fields over the next two decades under a landmark new approval.
The revenue stream will come from the giant Bayu-Undan gas condensate field which lies about 250 kilometers (155 miles) south of East Timor and 500 kilometers north-west of the northern Australian city of Darwin.
ConocoPhillips, the U.S. operator and major shareholder in the Bayu-Undan gas project, announced on Sunday that its gas development plan had been approved by the Timor Sea Designated Authority, the joint Australia-East Timor body which oversees development of the area's resources.
ConocoPhillips said it would now push ahead with a $1.5 billion development that includes a gas pipeline from Bayu-Undan to Darwin and a liquefied natural gas (LNG) plant at Darwin with an annual capacity of 3 million tonnes.
The gas plant is due to begin deliveries in early 2006, with Japan's Tokyo Electric Power Co (TEPCO) and Tokyo Gas agreeing to take virtually 100 percent of output for 17 years.
The Bayu-Undan partners already have the go-ahead for the gas recycle and liquids part of the project, which is expected to begin production of condensate and liquefied petroleum gas in late 2004.
Santos, the Australian partner in the project, said the latest approval would increase total revenue from the Bayu-Undan field to more than Aust. $30 billion ($20 billion).
According to ConocoPhillips, Bayu Undan has 3.4 trillion cubic feet of natural gas and 400 million barrels of condensate.
East Timor is entitled to 90 percent of the oil and gas royalties from the field.
The project is owned 64.14 percent by Houston-based ConocoPhillips, Australia's Santos with 11.83 percent, INPEX of Japan with 11.71 percent and Italy's AGIP (through Eni Australia) with 12.32 percent.
Under an agreement with the Japanese gas buyers, ConocoPhillips will sell a 10.08 percent stake to TEPCO and Tokyo Gas.
In a statement released to the Australian Stock Exchange on Monday, Santos said that under an equity realignment agreement, it would sell a 1.19 percent interest, taking its share down to 10.64 percent.
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