James Paton – East Timor's petroleum regulator has refused to accept Woodside Petroleum Ltd.'s plan to develop the Sunrise gas project, insisting on more detailed analysis of alternatives, including a plant in the southeast Asian nation.
"Woodside and its partners have not done their homework properly," Gualdino Da Silva, president of the National Petroleum Authority in East Timor, said in a telephone interview from Dili yesterday.
Australia's second-largest oil and gas producer and its partners, including Royal Dutch Shell Plc, selected floating liquefied natural gas technology for the Sunrise project in the Timor Sea, the Perth-based company announced April 29. The use of a floating plant is the best commercial option, and East Timor and Australia would each receive more than A$13 billion ($11 billion) in revenue, Woodside Chief Executive Officer Don Voelte said May 21.
The government of East Timor has remained opposed to any proposal that doesn't include building a plant on its soil to process the gas into LNG. Woodside ruled out that option because it was more expensive, Voelte said. The Sunrise partners also considered piping the gas to Darwin in northern Australia.
Woodside rose 1.8 percent to A$42.10 in Sydney, while the benchmark S&P/ASX 200 Index gained 1 percent.
"Sunrise is unlikely to be going anywhere in the near future given the political impasse with East Timor," Neil Beveridge, an analyst at Sanford C. Bernstein in Hong Kong, said in an e-mail today. With Woodside focusing on an expansion of its A$13 billion Pluto LNG venture in Western Australia, the company is "probably in no rush to be making compromises."
Threw documents back
The Australian company and the East Timor regulator dispute whether the Sunrise partners' proposal has been lodged with authorities in the country. Voelte said last week Woodside executives presented the plan to the regulator in Dili.
"We were trying to deliver our field development plan, which we did successfully deliver, but they went running out after us and threw it back in the car because I think they were told not to accept it," Voelte said in Sydney. Voelte said he met for more than two hours this month with East Timor President Jose Ramos-Horta, without seeing Prime Minister Xanana Gusmao.
Da Silva said the petroleum authority wouldn't single out a Sunrise proposal for evaluation until Woodside and the Sunrise partners had provided "in-depth" analysis on all three development options and had reached an "in-principle" agreement with the two governments.
The Woodside executives walked out of the May 18 meeting in Dili after officials from the regulator explained their position, Da Silva said.
The Australian company has received requests to meet with regulators in East Timor and Australia since the May 18 Dili meeting and "looks forward to continuing engagement," Roger Martin, a Woodside spokesman in Perth, said in an e-mail today.
Voelte said the companies and the governments are required by a treaty to select the best commercial option for the field. Woodside has a 33 percent stake in Sunrise. ConocoPhillips has 30 percent, Shell owns 27 percent and Osaka Gas Co. 10 percent.
The East Timorese regulator is concerned about the Sunrise delays, Da Silva said. Still, "we are not going to accept this and expedite this just for the sake of the revenues," he said. "We'd like to do this properly. We should not compromise the framework in place and the need for alignment between the stakeholders."
[Editors: John Viljoen, Alex Devine.]