East Timor rejects Woodside's gas processing plan | Asia Pacific

East Timor rejects Woodside's gas processing plan

East Timor rejects Woodside's gas processing plan

Updated 6 January 2012, 10:00 AEDT

East Timor's government is emphatic it would rather leave the Greater Sunrise gas deposits under the Timor Sea than drop its demand the gas be piped to East Timor for processing.

In the long running saga of the field, Sunrise leaseholder Woodside recently lodged a "best commercial advantage" report and a draft development plan, concluding that platform-based processing was the most viable. In a sharply worded rebuff, East Timor last week listed a raft of administrative hurdles .. rejecting outright Woodside's claims.

Presenter: Linda Mottram

Alfredo Pires, East Timor's Minister for Natural Resources; Jim Dunn, author and former advisor to the UN mission in East Timor

MOTTRAM: At a closed resources conference in Sydney last week, Woodside chief executive Don Voelte outlined the joint venture's work on the options for processing the Greater Sunrise gas .. concluding that a floating processing facility was the best economic option, not a pipeline to either Australia or East Timor. Woodside had fulfilled its obligations under international treaties and had an option that he said exceeds all the company's threshold economic hurdles.

The outcome has inflamed passions in East Timor. Alfredo Pires is East Timor's Minister for Natural Resources.

PIRES: Our policies have been very clear that if it's not piped to Timor Leste then yes we would be prepared to leave it as a deposit for future generations.

MOTTRAM: That would mean that you would forgo significant income from the project does that concern you at all?

PIRES: No this is not a question of managing our finances. I mean financially we are quite stable, maybe too stable in that regard. We are the biggest nation with the biggest surplus of 6 to 8-Billion dollars and it's growing by 100-Million dollars a month.

MOTTRAM: There's also another, smaller field that will start production in East Timor next year and a number of other blocks in the exploration stage in what the minister says are very prospective areas. That, Alfredo Pires says, makes it possible for East Timor to put off the exploitation of the Greater Sunrise deposits.

PIRES: We are in a position to be able to sit and wait basically.

MOTTRAM: But East Timor has challenged Woodside's position more fundamentally, claiming in a very terse statement that there are a range of technical requirements that Woodside hasn't fulfilled. It questions why the size of the field has been revised down, though Woodside's documents are said to give a detailed explanation of fluctuations in estimates as exploration goes on. Still Alfredo Pires accuses Woodside of running away from what's required of it and says the option of the pipeline to Dili still has not been explored and costed, at least to Dili's satisfaction.

PIRES: One pipeline has gone to Australia and is benefiting quite a lot the people of Australia so the next one should benefit Timor Leste. So that's basically on a fair go sort o f principle.

MOTTRAM: That's not specifically written into the treaty though is it that one pipeline goes one way, one goes the other?

PIRES: No, no but it's how you interpret the treaty. It's very quite clearly stated that it needs to be for the benefit of the two nations.

MOTTRAM: Veteran diplomat, author and former advisor to the U-N mission in East Timor, Jim Dunn, says he understands why East Timor's leaders are pushing the issue so hard.

DUNN: Because of course they witnessed their own weakness, their frailty when they saw that when the development of the oil fields began everything went to Darwin and they really felt that some of the processing or the advantages of having an oil field ought to go to Timor itself where of course the infrastructure can be appropriately developed. Whereas the oil companies feel that in fact the infrastructure's too weak.

MOTTRAM: Jim Dunn highlights the continuing under-development of much of East Timor, and the slow pace of creating the infrastructure for sophisticated onshore processing for the country's oil and gas wealth.

DUNN: The Timorese leaders would say look if we don't press them to do this now it'll never happen. They really want to benefit not just from having the oil out there and getting some royalties from it but actually having, taking part in the processing of the exploration.

MOTTRAM: And Jim Dunn suggests resource companies should take more account of East Timor's development needs.

DUNN: We shouldn't forget that only just over ten years ago East Timor was a nation reduced to ashes. I mean 73% of all houses and buildings had been destroyed or severely damaged and the virtual infrastructure had gone. So they still have a long way to go to become in any way prosperous apart from the facade.

MOTTRAM: Woodside has declined an interview on the issues. The fate of the Greater Sunrise project is now in the hands of the Australian and East Timorese regulatory authorities.

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