ConocoPhillips Wins Approval to Build LNG Plant in Darwin

Australia's Northern Territory has given ConocoPhillips the go-ahead to build an A$1.5 billion liquefied natural gas plant in Darwin Harbor to supply the Japanese market. However, the project hinges on ratification by Australia and East Timor of the Timor Sea treaty regulating exploitation of oil and gas resources in the region. The Northern Territory government has granted ConocoPhillips an exceptional development permit to build the LNG plant despite opposition from environmental and community groups. Phillips plans to build the A$1.5 billion pipeline from its Bayu-Undan gas field in the Timor Sea to Darwin to supply the plant. "This government has struck a balance between protecting our environment and creating jobs and investment for the future of the territory," Northern Territory Lands and Planning Minister Kon Vatskalis said.

The Australian and East Timorese governments hope to ratify the Timor Sea treaty by the end of the year, despite the lack of agreement over where the boundary lies between the two countries. The two governments signed the treaty in May, but it cannot be ratified until agreement is also reached on maritime boundaries governing the 62,000 square kilometer joint petroleum development area between the two. Under the treaty, the new nation of East Timor is to receive 90% of revenues from oil and gas deposits and Australia 10%.

An Australian parliamentary committee this week recommended ratifying the treaty at the same time as resolving a so-called "unitization" issue over sharing extra revenues eventually earned from the Greater Sunrise field, in which Phillips is a stake holder. Phillips has argued the treaty should be ratified even without agreement on unitization so it can press ahead with the Bayu-Undan oil and gas project.