Subject: DJ: Australian Government Cautious On East Timor Oil Claim
UPDATE: Australian Government Cautious On East Timor Oil Claim
March 2, 2004 3:37am Dow Jones Business News
By Stephen Bell Of DOW JONES NEWSWIRES
PERTH -(Dow Jones)- The Australian government Tuesday reacted cautiously to court action by a small U.S. petroleum company that is seeking US$10.5 billion in damages over its alleged oil and gas rights in the Timor Sea.
The suit, filed by Oceanic Exploration in U.S. District Court in Washington D.C., is the latest twist in a long-running feud over ownership of billions of dollars worth of oil and gas reserves located in waters to the north of Australia.
Oceanic and its subsidiary Petrotimor Companhia de Petroleos said they had filed a lawsuit alleging "theft, misappropriation and conversion" of oil and gas resources.
The lawsuit targets U.S. oil major ConocoPhillips (COP) and the governments of Australia, Indonesia and East Timor.
A spokeswoman for the Australian government's Department of Foreign Affairs and Trade said she understands that a civil suit has been filed in the U.S. courts by Oceanic.
"Oceanic Exploration's Timorese subsidiary Petrotimor last initiated and failed in an action against the commonwealth (government) in the Australian Federal Court in 2002," the spokeswoman told Dow Jones Newswires.
"Petrotimor did not pursue an appeal to the High Court."
"After failing in the Australian courts, Oceanic Exploration is looking to other overseas jurisdictions in an attempt to have its claims heard," the spokeswoman said.
The Indonesian government declined to comment on the lawsuit while a spokesman for the East Timor government couldn't be contacted.
A person familiar with the lawsuit said that the U.S. court will need to decide whether Oceanic has any "continuity of tenure" over a joint development area between Australia and East Timor that includes the ConocoPhillips-operated Bayu Undan gas project.
Spokesmen for ConocoPhillips and the Australian-based partner Santos Ltd. (STO.AU) both declined to comment on the Oceanic legal action.
Oceanic's alleged rights were granted in the 1970s when East Timor was a Portuguese colony. East Timor was subsequently annexed by Indonesia and, after a transitional period under United Nations authority, the country declared independence in 2002.
While Australia and East Timor have agreed a treaty to carve up an area of the Timor Sea, the deal is only an interim arrangement pending a fixed boundary.
The interim treaty allows impoverished East Timor to take a 90% of government revenues from the so-called Joint Petroleum Development Area, including Bayu Undan.
ConocoPhillips announced last month that first liquids production had been achieved from Bayu Undan's gas recycle phase.
The company is also building a US$1.5 billion liquefied natural gas plant at Darwin as part of Bayu Undan's second-phase development. LNG shipments to Japan are due to begin in the first half of 2006.
Bayu-Undan is owned by ConocoPhillips 56.72%, Italy's ENI (E) 12.04%, Santos 10.64%, INPEX 10.52%, Tokyo Electric Power Co Inc./Tokyo Gas Co. with 10.08%.
By Stephen Bell, Dow Jones Newswires; 61-8-9245-6408
Veronica Brooks in Canberra contributed to this article.
-Edited by Ian Pemberton
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