Subject: Oil and Gas Fields in the Timor Treaty Area [3 reports]

Received from Joyo Indonesia News

also: Australia, E Timor Bed Down Gas Development Deals; and Australian Senate Ambushed by Timor Sea Legislation: Minor Parties

Factbox - Oil and gas fields in the Timor Treaty area

MELBOURNE, March 6 (Reuters) - Following are key facts about the Timor Sea Treaty, Sunrise Unitisation Agreement and oil and gas developments in the Timor Sea.

TIMOR SEA TREATY

The Timor Sea Treaty was originally signed by Australia and Indonesia in 1989, splitting revenues equally between the two nations from the joint petroleum development zone.

However, in 1999 East Timor voted in a referendum to end 24 years of Indonesian rule and became the world's newest nation on May 20, 2002, when it celebrated its independence.

The new treaty between Australia and East Timor nullifies the previous agreement between Australia and Indonesia.

Royalties from the joint petroleum development area will now be split 90:10 in East Timor's favour.

The joint petroleum development zone has been managed by the Timor Gap Joint Authority and has been governed by its own petroleum mining code, including health and safety regulations, and production sharing contracts (PSC).

SUNRISE UNITISATION AGREEMENT

The Greater Sunrise gas field lies 20 percent in the treaty area and 80 percent in Australian waters.

The unitisation agreement governs how tax revenue from the project will be divided as each section of the field is developed.

The Greater Sunrise field is also, separately, the subject of overlapping permanent maritime boundary claims by Australia and East Timor.

OIL AND GAS FIELDS

* Greater Sunrise: A A$6.6 billion ($4.1 billion) joint venture operated by Woodside Petroleum owns 33.44 percent, Phillips Petroleum 30 percent, Royal Dutch/Shell 26.56 percent and Osaka Gas Co Ltd 10 percent.

Greater Sunrise has the capacity to supply long-term gas contracts for more than 30 years and contains around nine trillion cubic feet of natural gas and 320 million barrels of liquids.

The Sunrise joint venture last year decided to pursue an ambitious project to build the world's first LNG production production plant at sea to supply Asian markets.

The project does not yet have any customers, but is aiming to produce its first commercial LNG by 2008. The project is estimated to be worth up to A$2 billion in revenue to East Timor over the life of the project.

* Bayu-Undan -- A A$3.8 billion liquids and LNG project operated by Phillips with 48.47 percent, Santos Ltd 11.8 percent, unlisted Japanese energy group INPEX Corp 11.7 percent, Kerr McGee Corp 11.2 percent and Eni unit Agip 6.7 percent. Tokyo Electric Power Co Inc and Tokyo Gas Ltd together own 10.1 percent.

The field, which covers about 25km by 15km and lies in the joint zone, has an estimated life of 25 years and a recoverable reserve of around 400 million barrels of liquids and 3.4 trillion cubic feet of gas. A$3 billion has already been spent developing it. First liquids production is expected in 2004 and liquefied natural gas (LNG) in 2006.

The Bayu Undan joint venture has agreed to supply two million tonnes of LNG a year to Tokyo Electric Power Co Inc and one million tonnes of LNG annually to Tokyo Gas Co Ltd over 17 years from 2006.

The project is estimated to be worth around $3 billion in revenue to East Timor.

* Laminaria -- operator Woodside Petroleum with 44.9 percent, BHP Billiton 32.6 percent and Shell 22.5 percent.

* Corallina -- operator Woodside Petroleum with 50 percent, BHP Billiton 25 percent and Shell 25 percent.

The reserves of both oilfields are around 121 million standard barrels (proven) and 178 standard barrels (probable).

* Elang/Kakatua/Kakatua North -- operator Phillips, shareholders Santos, Inpex and Emet Pty Ltd. Oil production began in 1998 and the fields have been producing around 17,000 barrels a day.

($1=A$1.61)


Dow Jones Newswires March 6, 2003

Australia, E Timor Bed Down Gas Development Deals

By VERONICA BROOKS Of DOW JONES NEWSWIRES

CANBERRA -- Australia and East Timor locked in two deals Thursday, giving the green light to an estimated A$50 billion in potential oil and gas developments in the Timor Sea.

The Australian parliament ratified the Timor Sea treaty, beating a deadline for a major supply contract important to the A$3.8 billion Bayu-Undan liquefied natural gas project.

On the same day, Australia and its northern neighbor signed the International Unitization Agreement, which involves a royalty-sharing arrangement for the potential development of the much larger Greater Sunrise gas fields.

Resolution of both pacts came after some frantic diplomacy by Prime Minister John Howard amid fears that a dispute over the Sunrise unitization would delay treaty ratification and force U.S. oil major ConocoPhillips (COP) to abandon its Bayu-Undan project.

According to a newspaper report Thursday, senior East Timorese officials allege the unitization agreement was locked in only after Howard threatened to hold up Australian ratification of the Timor Sea treaty.

Howard later confirmed he had a phone conversation with East Timor's Prime Minister Mari Alkatiri Wednesday but rejected accusations of trying to intimidate or strong-arm Dili.

"My call to Dr. Alkatiri, which was totally civil and cordial, in accordance with our close relationship, related solely to formal processes, and not to any of the substance of the negotiated package," Howard said in a statement.

His comments were backed by Foreign Affairs Minister Alexander Downer, who denied accusations Australia bullied East Timor.

"We haven't threatened to pull legislation. What we've wanted to do is put the package together and get the legislation through this week," Downer said.

He conceded negotiations between the two nations were at times "lively."

"There's an enormous amount at stake here," he told reporters before departing for the Timorese capital to sign the unitization document.

"We think in the end it's a fair compromise between Australian interests and East Timor interests," he said.

Australia Talks Up Benefits For East Timor Downer said the Timor Sea pacts will deliver significant financial benefits to East Timor, providing a foundation for economic development of the impoverished nation.

The Timor Sea treaty sets the terms for exploiting vast oil and gas reserves within the 62,000-square-kilometer Joint Petroleum Development Area, which takes in Bayu-Undan.

East Timor has a 90% entitlement and Australia 10%.

ConocoPhillips insisted the Timor Sea treaty be ratified by March 11 to protect a supply contract with Tokyo Electric Power Co. (J.TER) and Tokyo Gas (J.TYG) for the delivery of 3 million tons of LNG a year for 17 years beginning 2006.

ConocoPhillips' partners in Bayu-Undan are Santos Ltd. (A.STO), Inpex Corp., Kerr-McGee Corp. (KMG), Italy's Agip SpA (I.AGI), Tokyo Electric Power and Tokyo Gas.

A ConocoPhillips spokesman said ratification of the treaty clears the way for development of the A$2.8 billion second stage of Bayu-Undan, being the construction of a pipeline and processing plant in Darwin, in Australia's Northern Territory.

Ratification was a "a major hurdle" ConocoPhillips needed to pass to move the project forward, said Blair Murphy, the company's Darwin area manager.

Bayu-Undan is estimated to host as much as 3.4 trillion cubic feet of gas and 400 million barrels of gas liquids.

East Timor ratified the Timor Sea treaty in December.

Treaty Debate Gets Heated

The debate was fiery in the Australian parliament Thursday, with minor political parties condemning the government for ramming through the legislation and for its treatment of East Timor.

"It is an outrage. This is Australia being involved in a grand theft of the resources of our small neighbor in East Timor," Greens Senator Bob Brown told parliament.

It is estimated that East Timor, which gained independence from Indonesia last year, will reap a windfall of around A$5 billion in royalties over the life of Bayu-Undan.

But any benefits in relation to the A$6 billion Greater Sunrise project appear some way off as the partners still need to secure a viable market for the gas.

The Australian government estimates the gross value of the Greater Sunrise field, which is believed to contain 8.35 trillion cubic feet of gas, at A$20 billion.

Partners in Greater Sunrise comprise ConocoPhillips, Royal Dutch/Shell Group (RD) and Australia's Woodside Petroleum Ltd. (A.WPL).

Central to the dispute over Sunrise was East Timor's move to claim a maritime boundary that overlaps Australia's.

Both sides were eager to make sure any agreement over Greater Sunrise wouldn't prejudice their positions on a permanent maritime boundary.

Under the unitization agreement, 80% of Greater Sunrise falls within Australian waters, with the remaining 20% in the Joint Petroleum Development Area shared by the two countries.

But Dili's government isn't about to abandon its efforts to take control of the whole Greater Sunrise field, says Jonathan Morrow, an adviser to Prime Minister Alkatiri over the Timor Sea.

"The government doesn't accept the terms of the Greater Sunrise agreement as any way permanent," Morrow told Dow Jones Newswires. "We feel we've still got some years left to pressure Australia."

East Timor contends that its current maritime boundaries with Australia, set during the 1970s, should be redrawn under current international law. With new borders equidistant between the two countries, the Greater Sunrise fields would fall completely in its waters, East Timor claims.

Australia has refused to negotiate on the matter, withdrawing from international arbitration last year.

-By Veronica Brooks, Dow Jones Newswires;

61-2-6208-0901; veronica.brooks@dowjones.com

(Ray Brindal in Canberra and Tom Wright in Jakarta contributed to this article)

-Edited by Paul Godby


Australian Senate Ambushed by Timor Sea Legislation: Minor Parties

CANBERRA, March 6 Asia Pulse/Antara - The Greens and Australian Democrats claim the Senate has been ambushed by legislation which must be passed today if a multi-billion dollar Timor Sea gas project is to go ahead.

Both parties foreshadowed amendments to the Timor Sea Treaty laws that were only passed by the lower house yesterday.

But the opposition has ruled out preventing the legislation passing today by supporting such amendments.

Parliament sits for the last day today before a March 11 deadline for treaty ratification that is a prerequisite for the multi-billion dollar Bayu-Undan gas pipeline to Darwin to go ahead.

The non-government parties complained that the tight deadline made proper scrutiny of the legislation impossible.

"In the absence of any explanation as to why it couldn't be brought in until yesterday ... we are being ambushed in the interests of the big oil companies to cheat East Timor and we Greens are not going to be part of that," Greens Leader Senator Bob Brown told the Senate.

Australian Democrats Senator Natasha Stott Despoja said drafting amendments to improve the worst aspects of the laws had been almost impossible in less than 24 hours.

"I don't think anyone in this chamber could hold their head high and genuinely and honestly say the process has been anything but deficient," she said.

Labor Senator Kerry O'Brien said the legislation should have been dealt with at least three months ago.

Liberal Senator Eric Abetz questioned the Greens and Democrats authority to reject the treaty as unfair to the East Timorese when it was supported by the East Timorese government.

"Now if individual senators in this place happen to think that they have ... greater authority to speak than the prime minister of East Timor on this issue, then I would find that patronising, nearly colonial," he said.


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