ConocoPhillips to Divest Timor Sea Acreage
ConocoPhillips has reached an agreement to sell its 30-percent interest in the Greater Sunrise natural gas and condensate fields between Australia and Timor-Leste to the government of Timor-Leste, the company reported Monday.
“We are pleased to reach an agreement mutually beneficial to the government of Timor-Leste and ConocoPhillips,” Matt Fox, ConocoPhillips’ executive vice president for strategy, exploration and technology, said in a company statement. “ConocoPhillips has a long history in Timor-Leste through out operated interest in the Bayu-Undan field. Although we differ with the government on its proposed development plan for Sunrise, we recognize the importance of the field to the nation of Timor-Leste, and the sale of our interest to the government gives them a working interest in this important development.”
According to ConocoPhillips, the total $350 million sales price of the transaction hinges on the government receiving funding approval from the Timor-Leste Council of Ministers and National Parliament, regulatory approvals and partner pre-emption rights. The company stated that it expects the sale to close in 1Q 2019 and that it will use the proceeds for general corporate purposes.
When it acquires nearly one-third of Greater Sunrise, what should the Timor-Leste government do?
“We believe the likely forward plan to monetize Sunrise is now through an onshore liquefied natural gas (LNG) development,” according to a commentary by Wood Mackenzie analyst David Low.
Low noted that an onshore LNG project would entail:
- Constructing a new liquefaction plant and associated infrastructure
- A floating production storage and offloading (FPSO) vessel to process and handle the condensate
- Constructing a pipeline linking the FPSO to shore
As a March 30 article on the East Asia Forum website indicates, Australia and Timor-Leste this year signed a historic treaty that establishes a permanent maritime boundary between the two countries. The article also notes that an ongoing issue following the treaty’s signing is whether to ship gas from Greater Sunrise via pipeline for onshore processing to Timor-Leste or Australia.
Timor-Leste’s authorities would like to harness the economic benefits of an onshore development, Low observed. Also, he stated that developing Sunrise would enable the Southeast Asian country to replace declining revenues from the mature Bayu Undan gas condensate field in the Timor Sea.
“We believe the key onshore project risk is the construction of a greenfield LNG project in a country that has historically lacked large-scale infrastructure projects,” noted Low. “The next step is for the project to put forward a viable development plan that all the project participants would be willing and happy to commit to.”
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