DARWIN, Jun 06, 2005 (Dow Jones Commodities News via Comtex)
Looking to set up a major oil and gas industry, East Timor said Monday that it will launch an international roadshow in September for a proposed release of exploration blocks.
But the tiny South East Asian nation still won't endorse Australian claims that a US$5 billion revenue sharing deal over a disputed Timor Sea gas project is near completion.
"We won't negotiate through the media, it is between the two governments," an East Timor spokesman told Dow Jones Newswires, in reference to the long-running dispute.
He was responding to comments by Australia's Industry & Resources Minister, Ian Macfarlane, who told the SEAAOC oil and gas conference that the countries are on the "threshold" of a deal following negotiations last month.
Warning that Sunrise gas project operator Woodside Petroleum (WPL.AU) is looking at other options, Macfarlane also said that deal needs to be signed as a "matter of urgency" for impoverished East Timor.
Completion is "really in the hands of the negotiators but my understanding is we are very close," he said.
"I'm hoping that when it does get signed, it won't be too late," he added.
Macfarlane said that officials are working on the "finer details of some aspects of the agreement but all major elements have been ticked off by our respective parties."
The pact, which was broadly thrashed out last month in Sydney, would see East Timor gain access to half of Sunrise's future revenues in return for setting aside negotiations on a permanent maritime boundary for 50 years.
Asked later by reporters whether his confidence is at odds with the view of East Timor President Mari Alkatiri, who has said that another one or two negotiating sessions may be needed to seal an agreement, Macfarlane said, "I'm hoping that there is less than that."
"I'm hoping that there is now really only some discussions to go on between officials, and then an exchange of letters between governments" he said.
East Timor is becoming increasingly aware that Woodside is looking "very seriously at other options" apart from its stalled US$5 billion Sunrise venture, Macfarlane said.
These include the Browse project offshore Western Australia state, and Woodside's 100%-owned Pluto venture near existing North West Shelf gas facilities, also operated by Woodside.
Depending on further drilling work, reserves at Pluto could be in excess of 8 trillion cubic feet of gas, or roughly the same size as Sunrise, Macfarlane said.
If those (Pluto) reserves are proven, "I'd imagine Woodside would be keen to develop that," he said.
Macfarlane said that a Timor Sea revenue deal could be worth between US$2 billion and US$5 billion to East Timor, depending on oil price movements.
That sum is on top of the US$14 billion that East Timor is expected to receive over two decades from current arrangements on Sunrise and the Bayu Undan field, Macfarlane said.
A proposed liquefied natural gas export venture on Sunrise was shelved by Woodside in November because of the uncertainty created by the border dispute.
Perth-based Woodside insists that it won't proceed with further development studies until it obtains "fiscal, legal and regulatory certainty" over the project.
Even if a deal is quickly signed between the two nations, analysts believe that Sunrise is unlikely to start producing gas until around 2012.
While the Timor Sea dispute edges closer to a resolution, East Timor said that it is preparing for a roadshow in Houston, London and Singapore to promote exploration blocks contained in areas outside the contested area around Sunrise.
East Timor is using Gaffney Cline & Associates, a Houston-based petroleum consultancy to help arrange the roadshow, Manuel de Lemos, acting director of the Timor Sea Office, told Dow Jones Newswires in an interview.
"We will explain to investors about our new legal and fiscal regime," he said, adding that East Timor's parliament is due to approve the country's petroleum legislation by mid-July.
It is too early to say how many individual blocks will be released, as a detailed map of the East Timor area covering 30,000 square kilometers will not be ready until August, he said.
East Timor originally hoped to host a roadshow for its maiden exploration licensing round last month.
However, the promotion was delayed to give the country's parliament time to pass legislation that finalizes the legal framework for an oil and gas industry.
"If you want to do an international roadshow, you have to have your regime in place," he said.
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