Subject: DJ: Australia Mulling E. Timor Boundary Talks in Sept
Dow Jones Newswires July 27, 2004
Australian Govt Mulling Sept Boundary Talks With E Timor
CANBERRA -- The Australian government said Wednesday it will make a decision in "the coming days" whether to proceed with the next round of maritime boundary negotiations with East Timor scheduled for September.
The decision will hinge on whether opposition Labor Party leader Mark Latham stands by comments made last week that a center-left government would restart the boundary talks if it wins office at this year's election.
Latham, during a radio interview, said the discussions over the ultimate ownership of billions of dollars worth of oil and gas deposits below the Timor Sea would need to "start again (under a Labor government) because...there's been a lot of bad blood across the negotiating table."
A spokesman for Foreign Minister Alexander Downer told Dow Jones Newswires that Latham's position undermines the negotiation process between Canberra and Dili.
The minister has written to Latham, offering him a detailed briefing on the matter.
"What the letter does is point out to Mr. Latham how destabilizing his public backflip has been and offer him a detailed briefing on the issue and the negotiations and give him the opportunity to go back to Labor's previous position of supporting the process," Downer's spokesman said.
"It would seem fruitless to go ahead with these talks in September if we have Labor saying it would restart negotiations. It totally undermines the talks so it would be pointless (to continue)."
Asked when the government will decide whether to press ahead with the September round of negotiations, the spokesman said: "We will have to make a judgment about that in the coming days. The letter went to Mr. Latham on Monday. We know he's received the letter but we don't have any further response at this stage.
"We'd point out that Labor's platform as recently as January had references to Timor and the negotiations. There was no suggestion and there is no suggestion in Labor's platform that it runs a view contrary to government policy on this," he said.
"From the policy substance point of view, there's been nothing but bipartisan support from Labor until last week's comments from Mr. Latham," the spokesman added.
"We want to give Mr. Latham the opportunity to be fully briefed on the issue because...he simply can't be aware of what's gone on in the negotiations so far and we don't believe he's fully across the issue."
East Timor's economic well-being rests on Dili's bid for a major redistribution of royalties from the Timor Sea oil and gas fields.
Australia and East Timor have agreed to a treaty to carve up an area of the Timor Sea, but the deal is only an interim arrangement pending a fixed boundary.
The Joint Petroleum Development Area deal gives East Timor 90% of government revenue from the ConocoPhillips (COP)-operated Bayu Undan field, which is due to begin exports of liquefied natural gas in early 2006.
However, East Timor has so far refused to ratify a second revenue-sharing deal known as the International Unitization Agreement.
Under this deal, 80% of the Woodside Petroleum Ltd. (WPL.AU)-operated Sunrise gas field - the largest prize in the Timor Sea - falls within Australian waters and the remaining 20% in the JPDA.
Woodside chief executive Don Voelte will visit East Timor shortly to discuss the future of the Greater Sunrise gas project, a source with knowledge of the visit told Dow Jones Newswires earlier Wednesday.
Just two months before East Timor became independent from Indonesia in May 2002, Australia announced it would no longer accept the jurisdiction of the International Court of Justice on maritime borders.
That left the East Timorese without an independent forum to deal with their claim that the border should be drawn in the middle of the 600 kilometers of sea separating the two countries.
Dili's claim would place the vast Sunrise gas fields and the nearby Bayu Undan gas field wholly in East Timor's waters.
But Australia is adamant its continental shelf should be the border as was agreed with Indonesia. In some places that is just 150 kilometers from East Timor's coastline and more than 450 kilometers from Darwin.
-By Veronica Brooks, Dow Jones Newswires;
-Edited by Paul Godby
Australia's Woodside To Lobby East Timor On Gas
By STEPHEN BELL Of DOW JONES NEWSWIRES
PERTH -- As the Timor Sea boundary dispute flares again, Woodside Petroleum Ltd. (WPL.AU) will lobby East Timor Prime Minister Mari Alkatiri this week on breaking a political stalemate at the company's A$6 billion Sunrise gas project.
The meeting between Woodside chief executive Don Voelte and Alkatiri is the latest move by the Perth-based petroleum group to speed development of the long-delayed liquefied natural gas venture.
Voelte will leave Australia late Wednesday for the meeting in Dili, a person familiar with the situation told Dow Jones Newswires.
A Woodside spokesman declined to comment on the trip, which follows fresh political arguments over the splitting of multibillion dollar petroleum revenues between Australia and East Timor.
"Woodside has maintained a consistent position on Sunrise for several months - that the project will stall unless the International Unitization Agreement is ratified by year-end," the spokesman told Dow Jones Newswires.
East Timor has so far refused to ratify the IUA, a temporary deal in which 80% of Sunrise falls in Australian waters and the remaining 20% in a joint area where East Timor receives 90% of revenues.
One of the world's poorest nations, East Timor argues that Sunrise should fall wholly in its control under its proposed maritime boundary with Australia.
Woodside is operator and 33.4% owner of Sunrise, which is regarded as the biggest prize in the Timor Sea. Its partners are ConocoPhillips (COP) with 30%, Royal Dutch/Shell Group 26.6% and Japan's Osaka Gas Co. (9532.TO) with 10%.
Alkatiri last month said the country will look at a "creative solution" to help hasten development of Sunrise's 7.7 trillion cubic feet of gas. But East Timor isn't prepared to back down on its border dispute with Australia over ownership reserves that could be worth US$12 billion to the island nation, he said.
Alkatiri has accused Australia of bullying East Timor by refusing to accept a boundary in the middle of the 600 kilometers of sea separating the two countries.
Australia, instead, argues the boundary should be the edge of the continental shelf, which in some places is just 80 kilometers from East Timor's coastline.
The next round of border talks between the two nations is due September 20.
The Australian government said Wednesday it will make a decision in "the coming days" whether to proceed with the talks.
The decision will hinge on whether opposition Labor Party leader Mark Latham stands by comments made last week that a center-left government will restart the boundary talks if it wins office at this year's election.
Australian Prime Minister John Howard accused Latham of damaging Canberra's negotiating position with East Timor as the neighbors try to thrash out a deal.
"What Mr. Latham has done by implying that East Timor would get a better deal under a Labor government is to undermine the Australian government's negotiating position and that is against the national interest," Howard told reporters.
But Labor mining and energy spokesman Joel Fitzgibbon defended Latham's comments.
"Mark was just reflecting on the state of play, and that is we have a Mexican stand-off between Australia and East Timor," he told Dow Jones Newswires.
"He was just stating the obvious that you've got to go back to the drawing board when the relationship sinks to such low depths."
Caught in the middle of the increasingly heated debate, the Sunrise partners are running out of time to catch a wave of rising Asian gas demand.
Owned 34% by Royal Dutch/Shell Group (RD), Woodside needs to decide on a design option for Sunrise late this year to meet a 2010 marketing "window" in China, the U.S. and Japan.
If the borders dispute isn't resolved soon, the field may not get off the ground until the middle of the next decade, analysts say.
Shell Australia chairman Tim Warren last month said that the dispute is hindering marketing efforts for Sunrise. The oil giant is "very reticent" about increasing investment in the field until an agreement is ratified, he said.
While the debate continues, Woodside is finalizing design options which include a pipeline to East Timor, a pipeline to Darwin and a floating LNG plant.
The partners have already spent around A$250 million exploring and studying Sunrise, which was discovered more than three decades ago.
Woodside needs to decide on a development plan to provide certainty to potential gas buyers, which includes Osaka Gas along with other Asian energy utilities.
A move into final engineering studies next year will give Woodside the opportunity to capture the rising LNG demand.
Government forecaster ABARE tips a strong demand outlook for LNG in Asia, although competition for supply is likely to be intense.
On its home turf, Sunrise faces competition from the Gorgon development off the coast of Western Australia. Gorgon is operated by ChevronTexaco Corp. (CVX). Both these projects are competing with low-cost projects in Qatar, Malaysia and Indonesia.
-By Stephen Bell, Dow Jones Newswires; 61-8-9245-6408 email@example.com (Veronica Brooks in Canberra contributed to this story) -Edited by Ian Pemberton
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