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Woodside's Sunrise stalled in Timor deal

West Australian - March 8, 2018

Peter Milne – Woodside's Sunrise LNG project remains stalled as East Timor slams negotiations to agree on a development concept and dismisses incentives to send the gas to Darwin that include a share of the project and $US300 million towards a gas pipeline to the impoverished nation.

A maritime border treaty between Australia and East Timor was signed in New York yesterday without the planned agreement on how to develop Sunrise, which lies in the long-disputed waters.

To settle the border dispute, East Timor in 2016 called for a compulsory negotiation under the UN Law of the Sea. Last August the two countries decided to agree to the Sunrise development concept by February.

With no agreement, the conciliation commission that ran the negotiations yesterday published an assessment of the options favoured by either side.

East Timor wants gas from the Sunrise field, first discovered in 1974, piped to an LNG plant built on its southern coast. The Sunrise joint venture's concept is to send the gas to the existing Bayu-Undan pipeline and on to the Darwin LNG plant.

Sunrise offered East Timor many incentives to choose Darwin. They included 3 per cent of the offshore project and 0.9 per cent of the Darwin LNG project free, $US200 million towards a gas pipeline to East Timor for local use and basing the offshore operations there. The Australian Government offered an extra $US100 million towards the pipeline.

The commission said it did not wish to recommend a concept, but that based on the assessment East Timor would have to subsidise the cost of building an LNG plant in its country by $US5.6 billion.

East Timor chief negotiator and former president Xanana Gusmao, in a letter to the commissioners leaked to the ABC, said the commission was not impartial and the "superficial" assessment had focused on building up the Darwin LNG concept, not treating both options equally.

He said Australia's promised contribution to the pipeline appeared to be an unjustified payment to secure an unfair business advantage for the Sunrise and Darwin LNG joint ventures.

A Woodside spokeswoman said it was disappointing the conciliation process did not result in an agreed development concept. Woodside plans to develop Sunrise after 2026.

Source: https://thewest.com.au/business/oil-gas/woodsides-sunrise-stalled-in-timor-deal-ng-b88766709z