Lindsay Murdoch, Darwin – A proposal has emerged for Woodside to supply gas for East Timor's domestic consumption as a way to break a deadlock in negotiations over the multibillion-dollar Greater Sunrise field in the Timor Sea.

But East Timor is still insisting the Perth-based company drop its plans to build one of the world's first floating liquefied natural gas platforms at the field and instead bring all of the gas to a processing plant in East Timor.

The proposal is to provide a small amount of Greater Sunrise's gas for an LNG plant that East Timor wants to build at Beaco Beach, near Viquque, on the south coast, where the government has set aside 250 hectares of land.

No plans for the supply of gas have been tabled in formal negotiations, which remain acrimonious after months of high-stakes claims and counterclaims.

A Woodside spokeswoman denied an offer has been made to build a domestic gas pipeline to East Timor.

"The floating LNG option maximises total petroleum revenue to Timor-Leste and Australia," the spokeswoman said. "The joint venture is committed to redelivering sustainable benefits to the people of Timor-Leste," she said.

East Timor has spent tens of millions of dollars commissioning studies it said showed a pipeline could be built from the field to East Timor across a deep seabed trench.

The Woodside spokeswoman said a floating LNG plant remained its preferred development option. Woodside chose the floating platform ahead of piping the gas from the field to East Timor or to an existing processing plant in Darwin.

In recent weeks the government in Dili has warned of the potential cost blowouts of building a floating platform, and accused Woodside of making misleading statements about the project.

Prime Minister Xanana Gusmao has repeatedly said his country is not prepared to forgo billions of dollars from Greater Sunrise, making a stand against corporate giants that plunder the resources of tiny nations.

Despite the deadlock, East Timor has allocated $US12.4 million for research and studies relating to an LNG processing plant at Beaco Beach, including marine studies and site survey, design and supervision.

It is also planning to spend at least US$36 million to develop a south coast petroleum infrastructure corridor. The government has said it wants the LNG plant at Beaco Beach to have a production capacity for up to 20 million tonnes per annum of LNG.

La'o Hamutuk, a non-government-organisation in Dili that closely monitors Greater Sunrise developments, said in a report that it seemed unlikely any studies or information from East Timor would change Woodside's view that a floating LNG platform would be $US2 billion cheaper than bringing gas to be processed on-shore.

"If Woodside is not persuaded, the project will remain stalled and Timor-Leste's $US12.4 million or more will have provided work for foreign consultants and contractors, but no benefits for our people," La'o Hamutuk said.

Under agreements reached in 2007, East Timor and Australia would equally share profits from the Greater Sunrise field, which is a joint development area of the Timor Sea.

Woodside is the operator of the Greater Sunrise joint venture that includes ConocoPhillips, Shell and Osaka Gas.