September 02, 2022 [ Reuters ] – East Timor’s majority owner of the huge Greater Sunrise gas field says piping gas from the field to be processed in East Timor can be done economically and would be much cheaper to run than if the gas were piped to Darwin in Australia.
Development of the Greater Sunrise field, first discovered in 1974 in waters between East Timor and Australia, is critical to the Timorese because the nation’s main source of revenue – the Bayu Undan oil and gas field – is due to stop producing this year.
Following the resolution in 2018 of a bitter maritime boundary dispute, the issue of where the gas should be piped has been a major hurdle to development of the field. The project’s operator, Woodside Energy Group, has long pushed for a pipe to Darwin.
Following talks this week, Australian Foreign Minister Penny Wong said on Thursday Greater Sunrise is an “extremely important project for Timor Leste” that has been stuck for many years. She said she told President Jose Ramos Horta and others “we need to unstick it”.
The East Timor and Australian governments are in talks to finalise a production sharing contract with the Sunrise joint venture partners, aiming for terms to be settled by November.
Woodside Chief Executive Meg O’Neill and state-owned Timor Gap President Antonio de Sousa told Reuters this week they were optimistic that Wong’s visit to East Timor would be the catalyst for concluding a production sharing contract.
“However, it is clear that the Sunrise JV partners are not aligned regarding the pipeline delivery point and that issue needs to be urgently resolved,” de Sousa said in emailed responses to questions from Reuters.
“Our independent studies confirm the technical and economic viability for the pipeline to be built to the south coast of Timor Leste. This is the only acceptable option for the people of Timor Leste.”
LOWER OPERATING COST IN EAST TIMOR
He did not disclose the latest cost estimates for the two options for developing Greater Sunrise with a pipe and new liquefied natural gas plant on the Timorese south coast or a pipe to an LNG plant in Darwin, but said the capital costs were not far apart and the operating cost would be considerably less in East Timor.
“While the CAPEX for the Timor Leste and Darwin options are in a similar range, the ongoing OPEN for the Timor Leste option is vastly superior,” de Sousa said.
The Australian Financial Review recently reported that the independent study showed total capital cost for the LNG project would be $11.8 billion in Darwin and $14.1 billion in East Timor. A previous study showed a $10 billion cost difference.
He said pursuing the Timor option would not require any government subsidies.
“LNG offtake contracts finance LNG projects globally. We have had interest from multiple parties and are very confident that there is sufficient interest to finance Timor Gap’s share,” de Sousa said.
Woodside has long argued the only economically viable way to develop the Greater Sunrise field is by a 450-kilometre-pipe to Darwin for processing into LNG.
Asked whether Timor Gap would be willing to buy Woodside’s 33% stake in the project if the Australian company opposed sending Sunrise gas to East Timor, de Sousa said: “We do not expect that will be necessary, but all options are on the table.”
A Woodside spokesperson declined to comment on the cost estimates, and reiterated that the current focus for the joint venture is to finalise a production sharing contract, with further meetings expected in the second half of 2022.
“Woodside remains committed to the development of Greater Sunrise provided there is fiscal and regulatory certainty necessary for a commercially viable development to proceed,” the spokesperson said.
Reporting by Sonali Paul
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