Subject: Timor-Leste Proven It’s Suspicious of Australian Woodside Company


Edisaun 143 addendum -

Aust Embassy: Greater Sunrise must benefit Timor-Leste

Monday, 15 June 2009

<> Tempo Semanal Edisaun 143

Timor-Leste Proven It’s Suspicious of Australian Woodside Company

Tempo Semanal, Dili, Timor-Leste

Including an Exclusive Interview with Mr. Alfredo Pires, East Timor Secretary of State for Natural Resources

The Government of Timor-Leste is firm in its position to find ways of bringing the pipeline from the Greater Sunrise oil field, a joint development area between Australia and Timor-Leste, to its territory. Timor-Leste is Asia’s poorest country. This initiative, according to the government, will give the necessary boost to the economy and assist with addressing such issues poverty and infant mortality. In a statement the Australian embassy in Dili said it agreed that the project should become an engine for development but added the way to proceed “is to let commercial operators get on with the job they know best, extracting and processing those resources in the most cost effective way, thus maximizing the benefits that will flow to the people of Timor-Leste, both for the current generation and in the future”. However, Rui Castro, a businessman and former resistance activist, was adamant that Australia should be more sympathetic to its neighbor and let the pipeline come to Timor-Leste. Castro said that Timor-Leste had helped Australia in its hour of need during World War 2 and many Timorese had died in the cause of Australian freedom. “ The Timorese people have forgiven past transgressions by our Australian neighbors, including the signing of a oil agreement during the Indonesian period, and all we’re asking for is a that the Australian government understand that we are a new nation trying to end poverty, develop a health service, and create jobs for the many thousands of unemployed youth”, Castro said. He continued, “We ask that Australia understands our position. We don’t want to be continually asking for donor funds but ask that we be given the chance to develop our economy and one of the best ways of achieving this is that the pipeline comes to Timor-Leste.”

Woodside prefers to drop the Timor-Leste option arguing that it’s to risky because of the trough in the sea between the Greater Sunrise oil/gas field and Timor-Leste, even though the distance is only 150 km. However, Australia’s Woodside Company has chosen an option of a 500 km distance from the Greater Sunrise field to Darwin. A few weeks ago in a meeting in Darwin, the Timor-Leste side noticed that the company had prepared a site in Darwin for the Sunrise LNG plant. Commenting on Woodside’s position Castro, said that Woodside has intentionally done this in order to bring the pipeline to Darwin. “Since 2004, Woodside has consistently ignored the Timor-Leste option which means there has been a plan and the intention has been to bring pipeline to Darwin”, Castro maintains. Castro has appealed to the Australian government to assist in bringing the pipeline to Timor-Leste. In a published document, Woodside has insisted that it is ‘committed to developing the Greater Sunrise resource in a fair and transparent manner’.

Meanwhile on Wednesday, (10/06/09) in an exclusive interview with Tempo Semanal, Mr. Alfredo Pires, East Timor Secretary of State for Natural Resources, said the Government of Timor-Leste has proven its suspicions towards Woodside. “Woodside is can not be consider being a prudent operator to look at Timor-Leste option for obvious reasons. So based on that and other things that Timor-Leste taken initiatives has come to a conclusion which we feel a very strong and very appropriate final outcome.”

Xanana Gusmao government has fought for the pipeline issue since the day he took office in August 2007 and Pires said if Woodside not cooperative then Timor-Leste may prepare for the worst decision: to not to develop the Greater sunrise field. “Timor-Leste feels strongly that pipeline for sunrise its only direction is to Timor-Leste. If not it’s very difficult for Timor-Leste to entertain any other options,” Pires give the option to Woodside.

Pires recently divulged information to Tempo Semanal about a new report from Norwegian Det Norke Veritas (DNV) Company, which says, “there is no stopper for the pipeline to come to Timor-Leste.” To know more about the Timor-Leste Government position please follow Tempo Semanal’s Interview with Mr. Alfredo Pires as below.

TS: Are you still optimistic that the pipeline still going to come to East Timor?

AP: Timor-Leste believes that the pipeline is very big possibility of coming to Timor-Leste on a number of fronts. On the technical aspects and on the commercial aspects, and also we look at the legal arrangement or the treaty arrangement. We have – there are clauses there that state that we need to look at the whole sunrise issue; not only at the technical and commercial issue, but we need to look at the all aspects as equity.

Timor-Leste is not as a mere stakeholders in the sunrise issue: we are owners. We can’t take this issue like this. We are owners. As owners, we need to make sure when we develop the resources. It’s in the interest of the state and companies, who need also to consider that issue. But now what Timor-Leste is requesting is not to make any projects not viable. We are very concerned of the viability of a project. That is why we have done other studies on the side to prove some suspicions we had. So far those suspicions had been proved correctly. The latest study which Timor-Leste has from a very reputable company, a 150-year-old Norwegian Company, stated quite clearly that there are no show-stoppers from the pipeline to come to Timor-Leste. These are some of the basic reasons, but among others reasons Timor-Leste feels strongly that a pipeline for sunrise’s its only direction is to Timor-Leste, if not it’s very difficult for Timor-Leste to entertain any other options.

TS: The Government of Timor-Leste maintains its position while Woodside is not considering the Timor-Leste option. Don’t you think the development of sunrise will happen shortly?

AP: At this stage I can assure you that it will not happen. Officially, the National Petroleum Authority has been ignored by Woodside. This is another attitude that we are not very happy with. Three concepts have been put forward to the National Petroleum Authority and Timor-Leste National Petroleum Authority has been requested for further details that need to look into the three options. And most specifically it feels that Timor-Leste option has not been given the right attention. In particular now, we have studies from the side to proof that the Timor-Leste option is much more viable than what we’ve been lead to believe. And it’s based on this finding and others studies that were previously done. I must remind everyone that in the previous Government, a leading Norwegian expert on the pipeline stated quiet clearly, after looking at the Woodside study, that Woodside can not be considered being a prudent operator to look at Timor-Leste option for obvious reasons. So based on that and other things that Timor-Leste taken initiatives has come to a conclusion which we feel a very strong and very appropriate final outcome.

TS: Do you have an access to the recent studies from Woodside reports and what is your opinion on it?

AP: Yes, we have access to those new reports and those new reports have been looked at by the National Petroleum Authority, which still considers a lot of work needs to be done and has sent back. But while sending back those reports, Woodside continued their statement that the Timor-Leste option is no longer an option. Those international statements are not very appropriate. We think they are misleading. We think the senior management in Woodside are misleading the shareholders of Woodside. This is a serious thing. But from Timor-Leste part taking into consideration our argument about the treaty that we signed. About equity, and we feel it is only fair that the children of Australia­particularly Darwin­enjoying the benefits of a LNG plant in Australia and it’s only fair that its time for Timor-Leste to also enjoy the benefits and business confidence that will come along with the LNG plant in Timor-Leste.

TS: There are some arguments that say that East Timor lacks human resources and has less expertise to work in the LNG Plant and will hire more people from other countries to work in the LNG plant if it come to Timor-Leste. What is your comment please?

AP: That argument we don’t accept at all. Within this argument, though, they appeared to be quite solid. But once we look at it deeply, we can easily dismantle the whole argument. Specifically for Timor-Leste, the position we are in now as a young nation at the stage of its economy, to not to grow but to take off so a LNG plant to Timor-Leste will act as starter motor for the economy in regard of its ten billion dollar investment in Timor-Leste. That will definitely attract a lot of attention and a lot of business confidence. It’s nothing new. It’s a similar affect that’s happening in Darwin at the moment. And that is what we are requesting now. The immediately affect on Timor-Leste, being a country with very high child mortality, I’m sure that with a few years time the jobs will be created immediately in the area of Be Asu, and the child mortality will have an impact as people simply getting to jobs. People are supplying goods to the supply bases it will create spin off but the sort of affects is going down even to the level child mortality, at least in that region of Timor-Leste. Now, for us, it’s about this: it’s about child mortality. If the pipeline is going to Australia they will benefit the children of Australia, a lot of benefit. But I think the children of Darwin have all the right of the Australian have. They have good strong economy and Darwin is a town that Timor-Leste also dreamed one day we could be half of Darwin or even a quarter of Darwin. These are the things that we need to look into the whole formula or we need to into the whole aspect of Sunrise as well. So it is not about making money or not making money. We know that the Timor-Leste option also a money-making machine and there are people who’re prepared to take the risks of an LNG plant to come to Timor-Leste. So we need to sit down and talk this through quite a lot more. But at this stage we don’t think start to talk it yet.

TS: A clause in the agreement states that the company has exclusive rights to decide on the pipeline issues. Don’t you think your government is violating the IUA by interfering in the process?

AP: We need to go back to the whole resource, the whole agreements that are in place. The company itself as we said before that there were previous studies stated that Woodside is not a prudent operator to look at the Timor-Leste options, and if the recent studies continue, the saying more studies to be done here and there. So this means it’s an issue, that if someone has done a bad job, we just can’t go on believing them. You have to make a decision sometime. And we might have to look at other means. Now, the reality of it is that the efforts Timor-Leste has done on the suspicions that the Timor-Leste option was not looked at carefully, has been proven correctly that the Timor-Leste option is much more viable than what we have been lead to believe. This is quite serious. So we just can’t go on like this blindly.

TS: It seems likely that your government has been very suspicious of Woodside then?

AP: No, we like to work together but it’s we better do it properly. Woodside is a strong company. It’s got its own abilities. But as any stakeholders in players of natural resources, we need to look at the bigger picture of how natural resources are to be developed and, to continue to maintain very hard stance, it maybe difficult to go anywhere. And what’s important for Timor-Leste is that Sunrise is not a priority for Timor-Leste itself. It something we can very easily leave on the ground for the next generation. And right now if things don’t progress and move in a fair manner, Timor-Leste will be pressured to take what I call the fourth option, which means to leave it to future generations.

TS: If Woodside agreed on the East Timor option, would you let the production go?

AP: If once we decide that the pipeline comes to Timor-Leste, there is no reason why we should not start looking at detailed studies of Greater Sunrise. It’s a process I think that will take 4 or 5 years, if we decide tomorrow to have gas coming out of Timor-Leste.

TS: Don’t you think Timor-Leste really needs more money from Greater Sunrise at this stage to develop the country?

AP: No….Because Timor-Leste right now has money in the bank. Our ability to spend: we have four, close to five, billion dollars. We have capacity to spend about 400 million. So for the next five years what we have in the bank even we do have a system still high. We do have a system that prevents us to spend but when the situation comes we can work around that. But if we should have Sunrise, yes we can take development a bit further. That’s what I need to emphasise. But what I need to emphasise is that, as a state, that a major paradigm has changed in Timor-Leste from 2 years ago, from the whole history of Timor-Leste: Timor-Leste now has money. So for anyone who has money, it becomes a bit difficult for someone to tell them what to do. That is the situation in Timor-Leste.

TS: Does Timor-Leste know the figures for the pipeline between Timor-Leste and Darwin? As Woodside put it, the Darwin option is very cheap compared to the Timor-Leste’s options.

AP: This one we can argue on that. On the pipeline itself, we need to understand that major component of a pipeline is the price of steel and the machine that lays the barge. The DNV’s studies have looked at the recent price studies and recent technology available for a pipeline, and the figures that are coming out­I will not quote exact figures­but they are showing that the pipeline itself has a very good chance that the Timor-Leste option is much cheaper for the pipeline itself, simply because of one thing: it’s shorter. Now the argument is that you’d require a higher technology, a more expensive technology; that one we can sit down and debate, considering that there are number of pipes around the world now that have been laid at that level. Now in India they have done it with some detailed studies of a pipeline going in 3500 m. So this news is very encouraging for Timor-Leste, that people are looking at much deeper pipes than in Timor-Leste. The geology of is not as unstable as we have been made to believe. So these things need to be confirmed. This things need to be looked at before a decision is made, because a pipeline to Timor-Leste is very important.

TS: What are the kind of figures that Woodside would indicate if the pipeline goes to Darwin?

AP: The Woodside reports indicate the pipeline itself to Darwin would be cheaper – the pipeline itself. But a lot of factors go in to determining the cheapness and a lot of assumptions are going in, so from whichever points of view that you want to look at it, you may be able to regulate the outcome. Posted by TEMPO SEMANAL at <>18:13 <>0 comments

<>Tempo Semanal Edisaun 143 addendum

Aust Embassy: Greater Sunrise must benefit Timor-Leste

READERS NOTE: Tempo Semanal is aware that it is not typical journalistic practice to directly express a newspaper’s opinion on such topics. The reporter responsible for this story intended the initial phrase of this story’s seventh paragraph to reflect opinions of sources he had consulted with. Tempo Semanal will write a formal correction notice in the next edition (22/06/09).

The Australian Embassy in Dili this week confirmed its government’s partnership with the Government of Timor-Leste to exploit the Greater Sunrise gas field will not commit to develop the field until a mutually viable plan has been established.

A spokesperson for the Embassy confirmed that the two governments are awaiting a presentation by a commercial consortium of their plan for exploitation of the field, which will include where and how they plan to process the gas extracted.

The consortium is led by Australian company, Woodside, and includes the foreign interests of Conoco Philips, Shell and Osaka Gas.

“No decision has been made on where a pipeline will go, or whether the gas will be processed at the site of extraction. This is a commercial decision for the companies involved, in accordance with the treaties,” stated the spokesperson.

The spokesperson also stated that, contrary to recent commentary, the Government of Timor-Leste would not be at a loss if a pipeline from Greater Sunrise was not constructed to Timor-Leste, given arrangements for Australia’s and Timor-Leste’s governments to each receive 50% of petroleum taxation revenues from the area.

“The suggestion that Timor-Leste will not benefit from the development of Greater Sunrise if the pipeline does not come to Timor-Leste is not correct. Shared production revenues from Bayu Undan (from which gas is piped to Darwin, Australia) are already providing the bulk of resources for the government budget through the Petroleum Fund and, with continued prudent management, will do so for many years into the future. Similarly, petroleum taxation revenues from the Greater Sunrise development would be an extremely valuable source of income for Timor-Leste for many years.”

It is this newspaper’s opinion (according to Timorese Government and business sources) that a pipeline to Timor-Leste would benefit this nation in ways other than through these taxation revenues, not least through commercially expressing its population’s national aspirations to retain greater control of resources that lie closer to Timor-Leste than Australia.

In keeping with previous arrangements, the Government of Australia is obliged to include the Government of Timor-Leste in decisions regarding the Greater Sunrise gas field. The Australian Embassy’s response to this newspaper’s questions and an Australian Embassy press release from 2 June have confirmed this, and do not give any indication of behaviour that may jeopardise Timor-Leste’s profits from future Greater Sunrise revenues.

Moreover, the Government of Timor-Leste’s long-term consultation with various interested parties indicates a maturity in its planning strategy that recognises each party’s position and is determined not to be taken advantage of, as may have happened in the past.

In 2004, the Australian company, Woodside, misled the Government of Timor-Leste when it was investigating options for transporting and potentially processing natural resources from Greater Sunrise.

A 2004 Norwegian report into Woodside’s feasibility study earlier that year criticised the company for approximately doubling the cost of constructing a pipeline to this nation’s southern coast from the minimum cost required.

In an exclusive interview with Tempo Semanal this week (see pages one and seven of this edition), Timor-Leste’s Secretary of the State for Natural Resources, Alfredo Pires, confirmed the need to be cautious in future planning, given how important future petroleum revenues are to one of the most underdeveloped nations in south-east Asia.

“Timor-Leste is not a mere stakeholder in the sunrise issue: we are owners,” Mr Pires said.

“We are very concerned of the viability of a project. That is why we have done other studies on the side to prove some suspicions we had. So far those suspicions had been proved correctly.”

“The Timor-Leste option is much more viable than what we’ve been lead to believe.”

In its press release on 2 June, the Australian Embassy stated the Australian Government had not urged Woodside or the Government of Timor-Leste to build a pipeline to Darwin, and did not comment on the integrity of Woodside’s past or present dealings in the Greater Sunrise issue.

“It is the companies who will be taking the risk in investing the billions of dollars required to establish the infrastructure necessary to extract and process the gas, so it is they, not our government, who must determine how best to process the gas,” the spokesperson said.

While at times it may be hard to distinguish between a Government’s interests and those of a company from the same country, this newspaper recognises that the Australian Government acknowledges the Government and people of Timor-Leste’s interests in maximising national benefits from Greater Sunrise exploitation.

According to an interview with Mr Pires in this edition of Tempo Semanal, the Government of Timor-Leste still appears to be pursuing a national pipeline strategy, and is prepared to delay the Greater Sunrise’s exploitation if such a strategy may not benefit Timor-Leste in the manner its people require.

Posted by TEMPO SEMANAL at <> 23:21 <> 0 comments <>  <

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