Regional LNG: Sunrise gas project could be jeopardized by dispute
Friday, June 4 2004 - 12:40 AM WIB
"The attitude of the East Timorese administration is having a very negative effect on the development of Sunrise," said Resources Minister Ian Macfarlane, who leaves for the United States on Friday to meet with California's energy secretary.
"There is a risk Sunrise will get left behind and companies will go and develop a whole range of fields in Western Australia, especially if the demand (from the U.S. West Coast) comes on," Macfarlane told Reuters in an interview.
Woodside Petroleum Ltd (WPL) has said selling LNG from the A$6.6 billion ($4.6 billion) Greater Sunrise field would prove difficult until East Timor approved a temporary pact with Australia to govern the field while a sea border is agreed.
Australian Prime Minister John Howard met California Governor Arnold Schwarzenegger in Los Angeles on Wednesday to discuss supplying liquefied natural gas (LNG).
Howard met Schwarzenegger to lobby for a BHP Billiton Ltd proposal for an offshore terminal that would supply LNG to the state and could be worth as much as A$15 billion to the Australia economy.
"If they do buy gas we want them to buy it from Australia. I will be looking for confirmation Australia is one of the top two preferred sources. We have 200 trillion cubic feet (Tcf) of gas and most of it is looking for a home," said Macfarlane.
Macfarlane said Australia's main competitors for U.S. West Coast supply contracts were developments in neighbouring Indonesia and Russia's Sakhalin Island.
The U.S. Department of Energy has predicted domestic natural gas demand will jump to 35 trillion cubic feet (Tcf) from 22 Tcf by 2025, which is likely to spur construction of new liquefied natural gas (LNG) terminals on the West Coast.
"Sunrise would be a good opportunity (to supply), but to a degree we haven't been able to reassure the companies the demands of the East Timorese will be met at a government-to-government level," Macfarlane said.
East Timor has said it may not ratify the deal mapping borders of the field, of which 20 percent lies in a shared region of the Timor Sea and 80 percent in Australian waters. It has said it would split revenue until Australia agrees to accelerate sea border talks.
A spokesman for East Timor Prime Minister Mari Alkatiri defended his country's position, saying Australia was acting contrary to "the spirit and letter" of the temporary Greater Sunrise deal.
"Australia is also undermining the agreement by issuing and advertising exploration licences in the disputed area adjacent to Greater Sunrise," the spokesman said.
Along with Greater Sunrise, which is targeting north Asia and the U.S. West Cost for deals, Australia could supply the United States with LNG from the A$11 billion Gorgon project, operated by ChevronTexaco offshore northwest Australia.
Australia, which previously sent its LNG exports to Japan, won initial agreement from China two years ago for a potential $25 billion deal to supply Guangdong province in one of the biggest export deals in Australia's history.(*)