Canberra – Woodside Petroleum Ltd. shares slipped Thursday after East Timor's government said it will block proposals by a consortium led by the Australian oil and gas company to develop a disputed oil and gas field worth billions of dollars.
Malaysia's state-run energy company Petronas declined to comment on whether it would consider stepping in to exploit the Greater Sunrise field and the Timorese government said it hadn't issued such an invitation to the company. Petronas and the Timorese government have conducted a joint feasibility study on developing the field.
Greater Sunrise – estimated to hold 240 million barrels of light oil and 5.4 trillion cubic feet (154 billion cubic meters) of natural gas – must be approved by both Timor and Australia, according to a 2007 treaty between the neighboring states.
The deal gives the parties until 2013 to agree upon a joint development plan. But Timor's latest position shoots down all proposals put forward so far by the Woodside consortium which includes Royal Dutch/Shell, Osaka Gas and ConocoPhillips.
In their toughest stance to date, Timor says it will not support Woodside's development plan, possibly rendering the 2007 treaty meaningless.
Woodside shares dropped 0.2 percent to AU$48.42 ($45.04) on Thursday, while other resource stocks gained ground on the back of firmer commodity prices. The benchmark S&P/ASX200 index of Australian shares rose 0.6 percent.
Resources and Energy Minister Martin Ferguson said on Thursday that Australia was waiting to see Woodside's final plan before passing judgment.
"The government is awaiting a final development proposal from the joint venture and the government remains committed to the treaty," Ferguson said through his spokesman Michael Bradley.
Woodside has said it favors piping Greater Sunrise gas to the Australian city of Darwin or building a floating plant over the gas field so that tankers can be loaded at sea.
East Timorese Secretary of State Agio Pereira said in a statement on Wednesday that neither of those options was acceptable. The government wants the gas piped to Timor.
Pereira referred to a joint study with Petronas of Greater Sunrise which found "conflicting results" in Woodside's costing of the Timor pipeline option.
The Timor government said Thursday it had not invited Petronas to tap Greater Sunrise but was keeping its options open to pipe oil and gas to Timor.
"The government has extended no such invitations or offers as implied in the press," the government told The Associated Press in a statement. "The government will confirm it is looking at all options to develop a thriving onshore petroleum industry," it said.
Petronas said Thursday it was not appropriate to comment on the Greater Sunrise project at this stage and refused to comment on whether the company would bid for the project if invited by Timor. "Petronas has been working with East Timor and will continue to do so," said company spokesman Azman Ibrahim.
Woodside said in a statement Wednesday that it is still considering development options with its joint venture partners and will seek to "develop the reservoir to the best commercial advantage, consistent with good oilfield practice."
David Wall, an oil and gas analyst with stockbroking firm Hartleys, said Woodside had previously resisted the Timor pipeline concept because a deep seabed trench between Great Sunrise and the Timor coast made the option uneconomical. Wall tipped that Woodside would opt for a floating plant.
[Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia contributed to this story.]