Indonesia gas threat to Sunrise: Report

Indonesia has been negotiating a $US5 billion ($6.6 billion) expansion of the Wickham Point LNG plant with the Northern Territory Government and Wickham Point operator ConocoPhillips, The Courier-Mail reported in its Monday edition.

The mooted expansion would be supplied from the Inpex-operated Abadi gas field in Indonesia's section of the Timor Sea.

Indonesian Energy & Mineral Resources Minister Purnomo Yusgiantoro is understood to have discussed the possibility of Abadi gas supplying a new LNG production train at Wickham Point with Territory Chief Minister Clare Martin in Darwin earlier this year. Further officials-level talks have been held over the technical issues that would be involved in a cross-border processing operation.

Using Abadi gas at Wickham Point would require Indonesian government approvals.

If the project were approved it would result in Indonesian gas being processed in Australia for the first time and severely undermine the chances of the Greater Sunrise gas field being developed in the near future.

The Abadi field, about 400km north of Darwin, is estimated to contain at least 7 trillion cubic feet of gas and is owned by the secretive Japanese Inpex group, which is believed to be one of the biggest holders of Australia's natural gas reserves.

Wickham Point's existing gas feed comes from East Timor. The $US3.3 million Bayu Undan LNG project, which is scheduled to begin shipping from the plant to Japan in the first half of next year, takes its gas from the Bayu Undan field located in the Joint Petroleum Development Area of the Timor Sea.

Bayu Undan has contracts to sell about 3 million tonnes of LNG a year for 17 years to Tokyo Electric and Tokyo Gas.

These contracts exhaust the available gas from Bayu Undan fields, but the Wickham Point site has licence approval for 10 million tonnes of LNG a year, with ConocoPhillips keen to use the full capacity as soon as possible.

Abadi is the first Timor Sea gas field found in Indonesian waters. It is closer to Darwin than the Woodside-operated Greater Sunrise field, whose development has been held up by the East Timor Government's consideration of a proposed $13 billion revenue sharing deal with Australia.

Ninety per cent of the revenues from Bayu Undan go to East Timor with the remainder going to Australia.(*)