East Timor is ready to develop the Greater Sunrise gas fields "tomorrow" but refuses to bend to Woodside's preference for a floating project.
Secretary of State for Natural Resources Alfredo Pires says he has major reservations about floating LNG technology, questioning whether the massive vessels could withstand extreme weather. "Things can go wrong with new technology and we don't have money to burn," he said.
East Timor instead wants a processing plant on its shores and says that will cost about $13 billion, not $18 billion as suggested by Woodside.
In September, the impoverished nation offered to contribute $800 million from its $14 billion petroleum fund towards the pipeline costs.
"We can sit down, discuss, maybe cover a few more things," Mr Pires told AAP. He said the results of front-end engineering and design studies for the onshore option would be revealed next month.
"Timor Leste continues to press on with the option. It's much more viable than what we have been led to believe." Gas could be taken from an onshore plant 365 days a year, compared to 320 days a year "at best" out at sea, depending on where the vessel was positioned, he said.
Floating processing was good for stranded fields, but that wasn't the case with Greater Sunrise, situated about 150km from East Timor but some 230km from Australia, Mr Pires said.
Gas from the Bayu-Undan field in the Joint Petroleum Development Area between the two nations had been piped to Darwin, but it was East Timor's turn to have its way.
"I think it's only fair that we get this other one," he said. "We're ready to go tomorrow."
Woodside chief executive Peter Coleman – who Mr Pires described as "refreshing" compared to his more difficult predecessor Don Voelte – decline to speculate on how the impasse would be resolved.
"I might wake up one morning and it's all done," Mr Coleman told an analyst teleconference on Tuesday. "Our relationship with the Timorese has been a solid one throughout this."
Mr Pires is in Australia to discuss investment in a planned $300 million-plus cement production facility in East Timor and will meet with Mr Coleman while here.
An unavoidable topic for discussion will be arbitration underway in The Hague, instigated after East Timor alleged Australian spies had bugged its Cabinet rooms while a treaty covering the Sunrise project was being negotiated in 2004.
Mr Pires said it was up to the Dutch court to determine whether the treaty remained valid. Under the terms of the treaty, if a development plan is not approved within six years, either party can terminate.