East Timor Still At Loggerheads with Sunrise Partners

SYDNEY (Dow Jones)

Three big oil companies have met a request by East Timor to submit different development concept studies for the Greater Sunrise gas field but an impasse over where to process the gas is showing little sign of breaking.

East Timor indicated Friday that it still wants gas from the field, which straddles Australian and East Timorese waters, piped to a new liquefied natural gas plant on its own shores. The LNG terminal would chill the gas to liquid for export by tanker.

Australia's Woodside Petroleum Ltd. (WPL.AU) and partners ConocoPhillips (COP) and Royal Dutch Shell Plc (RDSB.LN) in March chose a floating LNG vessel after assessing that the gas field isn't big enough to support construction of an onshore terminal and long pipeline to shore. Floating LNG--where gas would be chilled onboard a vessel bigger than an aircraft carrier--is a new concept championed by Shell that's been tested but never executed.

The Sunrise partners also selected floating LNG over piping gas south to an onshore terminal in Darwin, Australia.

In what could be interpreted as a small sign of progress, East Timor said Friday that Woodside has met its request to submit different development concept studies, including building a plant in East Timor.

But East Timor continued to espouse its preference for its own plant and Woodside said it hasn't changed its mind either. "Floating LNG remains our preferred development concept," a Woodside spokesman said.

Early this year, East Timor rejected documentation submitted by Woodside outlining the floating LNG plan because it wanted to see studies on all three concepts. Woodside Chief Executive Don Voelte later confirmed the document had been thrown back through a car window after Woodside representatives dropped it off with the country's energy regulator. The regulator claims the Woodside representatives dumped the document on a desk then walked out.

"In recent months, Woodside has relented to meet the conditions required by the regulators," East Timor's Secretary of State Agio Pereira said in a statement.

Perth-based Woodside has presented concept studies for floating LNG, a plant at Darwin and a plant in East Timor, also known as Timor-Leste. "These documents are being carefully scrutinized by the National Petroleum Authority along with the Australian regulators," Pereira said.

Woodside said last month in a filing that it continued to "actively progress" the Sunrise development and had submitted "concept evaluation reports" to East Timorese authorities in September.

According to Pereira, Woodside assessed that a pipeline from the Sunrise gas field to East Timor would be US$400 million cheaper than a pipeline to Darwin. He reiterated that independent studies commissioned by the government suggest a pipeline to East Timor would save costs.

"The government has consistently maintained their position that the option of the pipeline to Timor-Leste is the safest and most economically viable, following the spirit of the treaties covering the Timor Sea, which promote shared benefits," Pereira said.

Woodside has said that a floating LNG vessel would be A$5 billion cheaper than an onshore LNG plant in East Timor.

East Timor's President Jose Ramos-Horta has used rhetoric that is a little more conciliatory than some of his colleagues. In June, he said if a pipeline to East Timor proves too expensive, "then we have to think twice. We don't want a white elephant."

Woodside last week announced a A$900 million cost blow out and six-month delay at its Pluto LNG project in Western Australia state, partly because it found flare towers weren't cyclone proof.

Pereira said this raises concerns "given the potential cost blowouts for the untested floating LNG technology ... which holds far greater risks than simple flare tower technology".

Shell also wants to use floating LNG to develop the Prelude gas field offshore Western Australia state. It plans to make a final investment decision on that project in the first half of 2011 in what would be the first ever go-ahead for construction of a floating LNG vessel.



Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Production Operator - Bladder Blade Separators/Manifolds Speci
Expertise: Mechanical Technician|Production Operator|Production Technologist
Location: Houston, TX
Commercial Engineering Analyst - Refinery
Expertise: Commercial Management|Refinery Specialist|Refinery Staff
Location: Baton Rouge, LA
US El Reno, OK: Associate Mechanic Technician - Mechanic Technician II
Expertise: Mechanical Technician
Location: El Reno, OK
search for more jobs

Brent Crude Oil : $51.38/BBL 2.44%
Light Crude Oil : $50.43/BBL 2.26%
Natural Gas : $3.14/MMBtu 0.94%
Updated in last 24 hours