Woodside Puts Finishing Touches on Sunrise LNG Plan

PERTH (Dow Jones), Jan. 13, 2010

Australia's Woodside Petroleum Ltd. said Wednesday it's finalizing a development plan for the Sunrise liquefied natural gas field that will deliver "significant" benefits to the fledgling nation of East Timor.

But hopes of a quick approval for the project receded when East Timor said it will block proposals by the Woodside-led consortium to develop billions of dollars in disputed oil and gas.

According to an Associated Press report from Jakarta, East Timor Secretary of State Agio Pereira said proposals from Woodside to exploit the Sunrise field "would not be approved by the government."

The apparent hard line by East Timor, which wants an LNG plant built on its coastline, as opposed to Woodside's preference to pipe the gas to Darwin or use a floating LNG plant, raises the prospects of further delays.

Containing more than 5 trillion cubic feet of gas and associated condensate, Sunrise was discovered more than three decades ago. But its location in the Australia and Timor-Leste joint petroleum development area has frustrated several previous development attempts.

Under a treaty between the two countries -- and the Sunrise Joint Venture participants -- operator Woodside is required to develop the gas "to the best commercial advantage, consistent with good oil field practice," the company said in response to the AP story.

"Woodside and its Joint Venture participants are finalizing a development theme selection that will accord with key treaty requirements," the company said.

Following concept selection, Woodside will work with the Timor Leste and Australian governments to secure the timely approval of a development plan, it said.

Sunrise will deliver "significant social and economic benefits including petroleum revenues, taxes and training and employment opportunities to both Australia and Timor Leste," it added.

The project, which Woodside hopes to approve by 2011, is one of several big LNG developments planned by the Australian energy company in the next few years as it pushes to become a world-scale LNG player.

The others are an expansion of Woodside's partly built Pluto venture, and the Browse project, both offshore Western Australia.

Few analysts have factored Sunrise into their Woodside profit models because of the project's long history of false dawns.

East Timor wants to create a new petrochemical sector on its shores to create jobs and spur the economy.

But Woodside has ruled out landing the gas in East Timor, citing greater costs and the technical risks in having to build a pipeline across a deep ocean trench.

Woodside's Sunrise partners are ConocoPhillips (COP), Royal Dutch Shell (RDSB.LN) and Osaka Gas.

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