Rhiannon Hoyle, Adelaide, Australia – The chief executive of Woodside Energy Group Ltd. said she hopes a stalemate on the Greater Sunrise natural-gas project near East Timor can be broken following Australia's decision to appoint a special envoy to the project, but she highlighted challenges to the small nation's insistence that gas from the fields be processed in East Timor.
In an interview on Thursday, Woodside CEO Meg O'Neill said there will be technical and economic obstacles to piping gas from the Sunrise and Troubadour gas and condensate fields that make up the Greater Sunrise project, but that a production-sharing contract to outline fiscal terms needs to be agreed upon before development options can be assessed fully.
Woodside has previously said the gas could be piped to the Australian city of Darwin. East Timor, the eastern half of an island about 1,300 miles east of Jakarta also known as Timor-Leste, wants to process the gas within its country to create jobs and support industrial development.
East Timor President Jose Ramos-Horta this week told The Wall Street Journal that it is essential that gas from the project be piped to East Timor to help with economic stability and to reduce the nation's dependence on foreign aid.
"There are some challenging technical factors with trying to get the gas from the fields to Timor-Leste," Ms. O'Neill said Thursday. "There's a very deep trench that a pipeline would have to traverse and, technically, that's extraordinarily complicated."
Utilizing existing liquefied-natural-gas infrastructure in Darwin will also likely be more cost effective, she said.
No decisions have been made on where the gas could be processed. "There's a lot of technical work that needs to happen to understand the choices in development concepts and there's not a lot of merit in spending money on engineering studies when we don't understand the commercial framework," she said, referring to the need for a production-sharing contract.
The Sunrise and Troubadour fields were discovered in 1974 roughly 280 miles northwest of Darwin and 90 miles south of East Timor.
East Timor's state-owned energy company owns almost 57% of the project, while Woodside owns about 33%. Japan's Osaka Gas Co. owns 10%. The Australian government isn't part of the joint venture.
In a third-quarter production report on Thursday, Woodside said joint-venture and government representatives recently held a third trilateral meeting for this year to progress the production-sharing contract. Ms. O'Neill declined to comment on the content of the meeting.
She said negotiations on the contract, which must be agreed on by the joint venture and the East Timor and Australian governments, are especially complex.
"Negotiating a contract with one government is complicated. When you are negotiating with two, it is more than twice as complicated," she said.
On Tuesday, Australia named a former premier of Victoria state, Steve Bracks, as a special representative to the Greater Sunrise project in an effort to advance talks.
Dr. Ramos-Horta in August said East Timor might consider seeking Chinese investment if a deal couldn't be struck with existing development partners to bring the gas to the small country via pipeline.
"With both governments being keenly interested in progressing, that certainly sets a very positive framework for us to move forward," Ms. O'Neill said.
Australian Foreign Minister Penny Wong said it is important the fields be developed in a profitable way that can support the economic development of East Timor. The International Monetary Fund in September said East Timor's oil revenues are expected to dry up next year as an aging field nearby winds down, creating huge fiscal imbalances that will deplete the country's roughly $18 billion petroleum fund.
Woodside wants to advance the project, especially as European efforts to replace Russian gas make LNG investments more appealing, Ms. O'Neill said. "We think it has the potential to be quite an attractive asset for us, so our focus is on moving the opportunity forward," she said.