Subject: East Timor gas project to bring in $80m a year

[Note: Not clear if US or Aust. $s quoted in article; probably Australian $]

Sydney Morning Herald 28/10/99

Gas project to bring in $80m a year

East Timor and the Australian Government may each receive annual royalty income of $40 million from the planned $2.1 billion Bayu-Undan gas project, which has been given the go-ahead.

The project in the Timor Sea is set to be a key source of income for the newly independent East Timor. First production is due in late 2003.

The first stage involves an operation whereby liquids are stripped from the gas resource and the dry gas is reinjected back into the Bayu-Undan field for later use to feed either a domestic gas market or liquefied natural gas export market.

Bayu-Undan lies in the the Zone of Co-operation area subject to the Timor Gap treaty between Australia and Indonesia. The treaty is expected to be renegotiated with East Timor.

Under the terms of the current arrangements, both governments receive a joint share of the 60 per cent of the first tranche of petroleum royalty scheduled for the first few years of the project, which is expected to produce at an initial rate of 37 million barrels a year.

Using a base-case liquids price of about $29 to $30 per barrel, the Australian and East Timorese governments could expect to receive about $40 million a year each from the first stage.


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