Subject: Australian Lower House Approves Treaty on Gas Field

Also: AP - Opposition lawmaker accuses Australian government of trying to cheat East Timor out of lucrative energy resources

Australian Lower House Approves Treaty on Gas Field

March 10 (Bloomberg) -- Australia's House of Representatives approved a treaty with East Timor on the legal and fiscal terms for the Woodside Petroleum Ltd.-led $3.7 billion Sunrise natural gas project in the Timor Sea.

The so-called ``unitization'' agreement for Sunrise, still needs to be approved by the Senate of the Parliament and be ratified by East Timor before it can take effect, said Niegel Grazia, Woodside external affairs manager. The project also needs to sign liquefied natural gas customers.

The Sunrise partners, which include Royal Dutch/Shell Group, ConocoPhillips and Osaka Gas Co., in 2002 rejected a $3.3 billion proposal by ConocoPhillips to pipe the gas ashore for sale in Australia, as well as Shell's plan supply only North America. They are also seeking customers in Asia and deciding how to develop the project.

``Sunrise cannot be developed without the entry into force of the unitization agreement,'' Woodside's Grazia said. ``It's one of the three key remaining milestones for the development of the project, along with finding customers and selecting the development concept.''

Under the agreement, about 20 percent of the A$20 billion ($15.1 billion) Greater Sunrise field lies in Australian waters and the rest in an area administered by both Australia and East Timor. Under the Timor Sea Treaty, which entered into effect last year, East Timor receives 90 percent of government revenue from projects in the jointly controlled area, and Australia the rest.

East Timor and Australia are in talks on maritime boundaries that may lead to more oil and gas revenue going to the former Indonesian province, which broke away from Southeast Asia's biggest oil producer in May 2002.

The so-called unitization agreement's ``approval by the Timor Leste parliament would be easier to obtain if Australia were to act in accordance with its international legal obligations,'' said Mari Alkatiri, prime minister of East Timor, in a statement forwarded by the Timor Sea Office, which helps to administer oil and gas projects for the country.

`Guarantee'

The legislation may not pass straight through the upper house Senate, said Kirsty Boazman, a spokeswoman for Industry Minister Ian Macfarlane. It has been sent to a senate committee, she said.

``A committee may set this back three or four months before the partners can get a guarantee from the Australian end,'' Boazman said in an interview. ``This is an unnecessary delay and the partners may even walk elsewhere.''

The main opposition Labor party's energy spokesman Joel Fitzgibbon said the committee would report back to the Senate by March 22. The Senate can then vote on the proposed law.

``If our concerns are answered through the committee process, we will pass it,'' Fitzgibbon said in an interview. ``We want to know what the implications of this law will be and we have some questions to answer before we support it in the Senate.''

Labor's support will guarantee the law's passage through the Senate. The government has control of the lower house of parliament, although it needs four extra Senate votes to pass its laws.

3 Options

The Sunrise partners are considering three options for developing the field, including using Shell's floating LNG technology, and piping gas onshore to either East Timor or Darwin for processing into LNG, Grazia said. Should the option be chosen to pipe gas to Darwin, where ConocoPhillips is already building an LNG plant to process gas from the nearby $1.8 billion Bayu- Undan project, the fuel may also be provided into the northern Australian market, he said.

``The project is going to be LNG driven,'' Grazia said. ``We need a foundation customer commitment of 2 to 3 million (metric) tons a year'' of gas sales to start engineering work, he said.

The unitization agreement includes an agreement that the overall fiscal terms for the Sunrise project won't change even if East Timor and Australia subsequently agree to a different division of royalties.

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Opposition lawmaker accuses Australian government of trying to cheat East Timor out of lucrative energy resources

March 10, 2004 6:12am AP Online

CANBERRA, Australia_Australian opposition lawmakers on Wednesday held up legislation to ratify an oil and gas field development deal with East Timor, saying the agreement exploited the impoverished nation.

Bob Brown of the Australian Greens Party said the deal _ to develop lucrative oil and gas reserves in the Timor Sea _ allowed Prime Minister John Howard's government to cheat the world's newest country out of billions of dollars worth of natural resources.

"It's an act of piracy by the Howard government," Brown told reporters. "It really is degrading to East Timor."

The deal, agreed a year ago, gives Australia 80 percent of the royalties from the massive Greater Sunrise gas and oil field _ the richest in the area and which industry analysts have valued at US$40 billion.

The bill introduced by the government on Wednesday was to ratify the agreement. Drilling cannot begin at the field until Canberra has ratified the agreement by making it law.

Speaking to The Associated Press last year, East Timor Prime Minister Mari Alkatiri said his tiny country, desperate to get oil and gas revenue flowing, had been pressured into signing the agreement.

The main opposition Labor Party called for more discussion of the bill late Wednesday, after Brown urged its members to reject the legislation.

Kirsty Boazman, a spokeswoman for Industry Minister Ian Macfarlane, said it was now unclear when the legislation would be passed.

"I don't understand. Labor has already agreed to this, and it's been through committee. They've already had the chance to discuss any aspects of it," she said. "It's opposition for opposition's sake."

Boazman also rejected Brown's claim that Australia was cheating East Timor and argued that a delay in development of the oil and gas field would be more harmful to the country.

"East Timor and Australia get nothing when (the reserves are) lying on the bottom of the sea, undeveloped," she said. "At the moment there's nothing for Australia to steal."


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