Regional LNG: Australia, East Timor agree Sunrise gas field deal

Australia and East Timor have settled a long-running dispute over oil and gas resources in the Timor Sea, Australian Foreign Minister Alexander Downer said on Thursday, paving the way for the development of the moth-balled Greater Sunrise gas field.

Downer said the prime ministers of Australia and East Timor would sign the new agreement by mid-January after officials from the two countries agreed on the deal during talks in Darwin on Wednesday.

"This is a deal which is a good one for Australia and East Timor," Downer told parliament. "It safeguards Australia's sovereign interests, and it will provide investors with the certainty needed for large-scale resource projects to go ahead."

The Greater Sunrise operator, Australia's Woodside Petroleum Ltd. , froze the $5 billion project in December last year after sea border talks between East Timor and Australia collapsed over the biggest gas resource in the Timor Sea.

Downer would not comment on details of the new revenue-sharing arrangement until the two governments formally signed the deal.

East Timor had previously agreed to shelve talks on a permanent sea border in exchange for dividing total revenues from the field equally between the two countries.

About 20 percent of Greater Sunrise, which holds an estimated 8 trillion cubic feet of gas and up to 300 million barrels of condensate, lies in the Joint Petroleum Development Area (JPDA) and the rest in what Australia calls its exclusive jurisdiction.

Under the JPDA, 90 percent of royalty revenues go to East Timor and 10 percent to Australia.

Downer said arrangements under the May 2002 Timor Sea treaty would remain in place, ensuring East Timor would continue to receive 90 percent of the revenues of the JPDA.

That could deliver up to $14.5 billion in revenue to East Timor over the next 20 years, he said.

Woodside, which had been aiming to make its first liquefied natural gas deliveries in 2010, has long said it would prefer Greater Sunrise gas to be transported to Wickham Point near the northern Australian city of Darwin, where an LNG plant is already being built for ConocoPhillips's Bayu-Undan project.

Greater Sunrise's other stakeholders are: ConocoPhillips, Royal Dutch/Shell and Japan's Osaka Gas Co. Ltd. . Woodside is 34 percent-owned by Shell. (*)