Subject: AP: Timor Sea resource deal on track

Also - AGE: Gas project on hold despite Timor deal; RT: E.Timor confident gas row with Australia nears end

Timor Sea resource deal on track

Monday, May 2, 2005 Posted: 0609 GMT (1409 HKT)

CANBERRA, Australia (AP) -- Australia and East Timor are on the threshold of a new era of cooperation following a breakthrough in their dispute over how to carve up sea bed oil and gas revenue, East Timor's foreign minister said Monday.

Canberra announced after negotiations in Dili last week that the two nations had agreed on how to share Timor Sea royalties despite failing to resolve an argument about where a common maritime border should lie.

Foreign Minister Alexander Downer told reporters on Friday that the two sides had reached "substantial agreement on all major issues" during the talks.

East Timor's Foreign Minister Jose Ramos Horta issued a statement Monday describing progress during the three days of negotiations in Dili as unprecedented.

"This puts our two nations on the threshold of a new era in bilateral relations and economic cooperation," Ramos Horta said.

"Finding ways to allow the development of petroleum resources will bring significant economic benefit to both nations," he added, saying that impoverished East Timor "stands to benefit enormously from a final resolution."

Ramos Horta said the agreement might involve a resource-sharing arrangement instead of hastily attempting to resolve a permanent maritime boundary.

"There are many details still to be worked through by the two sides," Ramos Horta said.

"Another meeting will be held in the very near future, but I am confident that we are on the brink of securing an agreement to handle for a long period our competing claims in the Timor Sea, and in turn unlock the enormous hydrocarbon potential of this region."

Canberra said that under the deal, East Timor will receive up to $3.9 billion of the projected $30 billion in revenue from oil and gas reserves in the Timor Sea.

That comes on top of a 90 percent share in revenue East Timor will receive under a previous deal covering part of the Timor Sea known as a joint development area.

Energy companies last year shelved plans to tap the Greater Sunrise field, the largest oil and gas field in the Timor Sea, after Canberra and Dili failed to agree on where to draw the maritime border.

One of those companies, Australian oil and gas producer Woodside has welcomed news of a breakthrough but has not said when Greater Sunrise development might now proceed.

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The Age

Gas project on hold despite Timor deal

By Barry FitzGerald Resources Editor May 2, 2005

Australia and East Timor's settlement of the long-running dispute over maritime boundaries and the sharing of oil and gas revenue from the Timor Sea is not itself enough for Woodside to begin planning for the $6.6 billion development of the Greater Sunrise gas project.

Woodside, project operator for Sunrise, said on the weekend that while it welcomed the agreement on major issues between the two governments, announced on Friday by Foreign Minister Alexander Downer, progress on the stalled project would "ultimately depend on the ability to secure gas customers".

The company noted that a final agreement between the governments would require ratification by their parliaments. "We would also require legal and fiscal certainty before proceeding," Woodside said.

In a rough-guide development schedule revealed early last month by Woodside, Sunrise would follow on from a likely expansion of its existing North-West Shelf and the development of its Browse Basin gas project, with first production from the latter likely from 2011 to 2014.

Woodside believes that the Browse Basin could underpin Western Australia's second liquefied-natural-gas production hub, with the potential to match the NWS project in size. Under that scenario, Sunrise would be unlikely to make it to the starting stalls until the second half of the next decade.

Announcing the agreement between the two governments on Friday, Mr Downer said that the Sunrise project would go ahead "sooner or later" depending on investors' decisions. The project straddles the disputed maritime boundary.

Mr Downer said that after three days of talks in Dili, Australian and East Timorese officials had reached agreement on major issues, with minor issues to be dealt with at a meeting in Brisbane on May 11.

Under the agreement, East Timor will receive up to $5 billion in addition to the revenue it receives from the joint development area in the Timor Sea.

Mr Downer said East Timor had agreed to postpone final resolution of the sea boundary dispute that has stalled talks over the past year.

"We're talking about them getting several billion dollars of additional revenue over and above what they would have otherwise got just from the 90 per cent revenue from the joint development area," he said.

http://www.theage.com.au/news/

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E.Timor confident gas row with Australia nears end 
Monday May 2, 2005, 2:30 pm

MELBOURNE, May 2 (Reuters) - East Timor Foreign Minister Jose Ramos-Horta said his tiny country and Australia were on the cusp of securing a long-term deal over splitting billions of dollars of revenues from yet-to-be developed offshore gas fields.

East Timor, one of Asia's poorest nations, agreed on Friday to shelve talks on a permanent sea border with Australia for 50 to 60 years in exchange for up to A$5 billion ($3.9 billion) of additional revenue from the Greater Sunrise field.

The agreement, reached by a team of 20 negotiators, still requires official approval by both governments but Ramos-Horta said unprecedented progress had been made during the three-and-a-half days of talks and both countries were on the threshold of a new era in bilateral relations.

"There are many details still to be worked through by the two sides ... but I am confident that we are on the brink of securing an agreement to handle for a long period our competing claims in the Timor Sea and in turn unlock the enormous hydrocarbon potential of this region," he said in a statement on Monday.

Final agreement would pave the way for Australia-listed Woodside Petroleum Ltd. (ASX: <http://au.finance.yahoo.com/q?s=WPL.ax&d=t&m=a>WPL.ax) to push ahead with plans for a A$6.6 billion liquefied natural gas (LNG) project.

The Greater Sunrise field has an estimated 8 trillion cubic feet of gas (about 225 billion cubic metres) and up to 300 million barrels of condensate.

But Woodside, which stalled the project late last year amid disagreement, has since given other LNG projects priority and said on Friday that developing Sunrise would depend on both parliaments signing off on the agreement and its ability to secure customers.

East Timor, which gained independence in 2002 after centuries of Portuguese colonial rule and 24 years of occupation by Indonesia, is depending on oil and gas revenues to rebuild its economy and wean itself from foreign aid.

Woodside has a 33.4 percent stake in Greater Sunrise, ConocoPhillips COP.N has 30 percent, and Royal Dutch/Shell RD.AS SHEL.L 26.56 percent. The balance is held by Japan's Osaka Gas Co. Ltd. 9532.T.

Woodside is 34 percent-owned by Shell. Woodside shares were trading up 0.51 percent at A$23.62 in early afternoon trade in a firmer overall market.

($1=A$1.28)


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