Tim Boreham and Karen Brown – East Timor will have to wait at least a decade to see any economic benefit from the Greater Sunrise gas field, with the $5 billion project slipping down the list of operator Woodside Petroleum's priorities.
According to industry analysts, the agreement between the Australian and East Timor governments on revenue-sharing provides much-needed certainty. The trouble is that Woodside's focus has turned to other priorities, such as its $11 billion Gorgon field on the North West Shelf.
Foreign Minister Alexander Downer said that last week's final round of the year-long negotiations had been successful. Under the expected ratified agreement, royalty revenues from the Greater Sunrise field will be shared 50-50 between the two countries.
East Timor's Government had refused to ratify a 2003 agreement which gave the struggling nation only an 18 per cent share.
The Greater Sunrise field, in the Timor Sea, contains an estimated 8 trillion cubic feet of gas and 300 million barrels of condensate, worth more than $40 billion at current market prices.
The project is expected to generate $10-12 billion in royalties over a 25-year life.
Commonwealth Securities senior energy analyst Peter Harris yesterday said the revenue agreement provided the "right environment" for the mothballed project eventually to go ahead.
"But Woodside have pretty much packed up their production team," he said. "Development would not take place until at least 10 to 12 years even if the agreement was signed tomorrow."
Mr Harris said Woodside and joint venture partner Shell had better options, including Gorgon and the Browse development off Broome. Last month, Woodside reported its Pluto gas discovery on the NW Shelf was bigger than expected.
Mr Harris also doubted whether Woodside would commit to building infrastructure in East Timor to support the project, given uncertainties, including the lack of contracted customers to buy the gas.
Woodside spokesman Roger Martin said the company welcomed the progress in the negotiations. "But we still need legal, fiscal and regulatory certainty before the project can proceed," he said.
While Mr Downer said the agreement would provide more work opportunities for the East Timorese, it is understood Woodside has no obligation to construct support facilities there.
One vaunted option is for the company to create a new LNG processing plant in East Timor, rather than shipping it to an existing plant in Darwin or using a floating facility.
Woodside is expected to negotiate directly with the East Timorese on the options, which might include skill sharing schemes or a local office.