Brian Robins – A breakthrough may be in sight for the long-stalled development of the Sunrise gas project which straddles the Australia-East Timor border, with Woodside reported to be prepared to cede ground on the vexed issue of piping the output to Timor.

According to East Timor's State Secretary for Natural Resources, Alfredo Pires, Woodside's new chief executive, Peter Coleman, has signalled support for piping gas from the field to Timor.

Development of the project has been on hold virtually since East Timor gained its independence due to its demand that the gas be piped to Timor for processing and before shipping on internationally, to maximise the economic benefit from the project for the impoverished country.

Mr Pires met Mr Coleman in August, and it is believed the two parties have held further talks since. Mr Pires said this week in Timor's national parliament that, while encouraged by the breakthrough comments by Mr Coleman indicating support for piping the gas to Timor, the Timor government would only support project on this basis.

Woodside officials were cautious in responding to Mr Pires's comments, saying that all parties were keen for the project to proceed. "Woodside strongly believes it is not beyond all of us to find a solution to the current impasse," a spokesman said.

"Woodside recognises that the Sunrise joint venture's preferred development concept differs from that of the Timor-Leste government's. We are not underestimating the difficulty of working through this process but we do believe that... it is possible."

The emergence of the US as a potential large gas exporter as it taps the potential of its boom in shale gas assets is an additional factor which may be forcing partners in the project back to the negotiating table.

Woodside's former chief executive, Don Voelte, publicly attacked the East Timor government over the long-running impasse, but Mr Coleman has been more conciliatory.

Rather than pipe the gas to Australia, Woodside had proposed a $US12 billion floating facility in the Timor Sea, which the Timorese government has ruled out. Minority partners in the venture include Royal Dutch Shell, ConocoPhillips and Osaka Gas. The fields are estimated to contain 5.1 trillion cubic feet of liquefied natural gas and 226 million barrels of condensate.