Sunrise floats into Timor row

The Greater Sunrise partners have opted for floating liquefaction at the Timor Sea field, a decision slammed by the Timor-Leste government, which said it "will not accept or endorse this concept and its associated plan now or in the future".

The Greater Sunrise field contains an estimated 5.13 trillion cubic feet of gas and straddles the maritime border between Australia and Timor-Leste.

Dili wants the gas developed on its shores, while Canberra has not declared a preference.

Australia's Woodside Petroleum, operator of the Sunrise gas fields, said announced today that all three of its project partners had unanimously chosen a floating liquefied natural gas facility as the preferred development option.

Timor-Leste however has said it wants to see the field's development include an onshore liquefaction plant near Dili.

Woodside's statement made no mention of Timor-Leste's opposition to such a plan but stressed that the floating LNG option would still offer significant benefits to the tiny, impoverished country.

"We expect that the selection of a floating LNG processing option will, in addition to generating significant long-term petroleum revenue, provide a broad range of social investment, employment and training opportunities for Timor-Leste," Woodside chief executive Don Voelte said in a statement.

The venture had been weighing up on whether to build a floating LNG ship that would produce 4 million tonnes of LNG per annum or an expansion of ConocoPhillips' existing onshore Darwin LNG plant, which would produce 5 million tpa.

In a statement released by Dili later this afternoon, the Secretary of State for the Council of Ministers, Agio Pereira, said: "Timor-Leste will not approve any development of Greater Sunrise that does not include a pipeline to Timor-Leste.”

The government statement went on to say that it considered Woodside’s announcement "a waste of valuable time, money and human capital; presenting a concept preference before appropriate consultation with the 'resource-owners'."

It added: "Woodside was acutely aware of the government's position before today’s announcement; but chose to proceed regardless. This is not only a source of great concern, but reflects an unacceptable level of arrogance. The approach has significantly compromised future relations with the government of Timor-Leste."

Gualdino da Silva, president of the National Petroleum Authority which has administrative responsibility for oil and gas resources, said this morning: "The development of Greater Sunrise must be in East Timor, which means that the LNG platform must be built in East Timor.

"If Woodside doesn't consider our option, then we will not decide to explore the oil and gas in Greater Sunrise and we will save it for our future generation."

Da Silva said a joint study by the government and Malaysian state-run producer Petronas found that a Timor-Leste-based plant was technically and commercially feasible.

Tension between the Timorese government and Woodside has heightened in the past year after Woodside ruled out building a liquefaction plant onshore, citing high costs and technical risks of building a pipeline across a deep ocean trench.

Timor-Leste's position on Greater Sunrise has at times appeared to be softer than its official pronouncements.

This month, East Timor President Jose Ramos-Horta hinted in an Australian radio interview that a floating platform might be the best way forward, but later a government website reasserted Dili's resolve to veto the floating LNG or Darwin expansion options.

Woodside said today its project partners, including supermajors ConocoPhillips and Shell, together with Japan's Osaka Gas, would continue to work with Canberra and Dili to "progress the development".

Delays in developing the Greater Sunrise project could put Woodside at a disadvantage in securing long-term customers.

Greater Sunrise is one of the three big development projects that are integral to Woodside's future growth prospects, along with its Pluto and Browse LNG project, so the company has been pushing ahead with plans to launch Sunrise as soon as possible.