Energy / Timor-Leste buys historic stake in Greater Sunrise fields

By: Sophie Raynor - Posted on: October 1, 2018 | Current Affairs

Timor-Leste has closed a deal to purchase ConocoPhillips’ multi-billion-dollar stake in the Greater Sunrise oil and gas fields, strengthening its position in long-running negotiations

Men from Timor-Leste wearing traditional costumes march during the Restoration of Independence Day in Dili. The country gained its independence in 2002. Photo: Antonio Dasiparu / EPA

The resource-dependent nation has agreed to buy out the US multinational energy corporation’s 30% stake in the undeveloped Greater Sunrise oil and gas fields, buried in the Timor Sea between Timor-Leste and Australia, for a reported $350 million.

The agreement, made on Thursday in Bali and reported by Portuguese news agency Lusa, represents an unusual move from Timor-Leste to influence the Woodside-led Greater Sunrise consortium’s decision on where to process the fields’ estimated 5.13 trillion cubic feet of gas and 226 million barrels of oil-like condensates, worth an estimated $40 billion.

Negotiations were led by Timor-Leste’s maritime boundary chief negotiator, former president and Prime Minister Xanana Gusmão, and ConocoPhillips Australia president Chris Wilson.

Timor-Leste has remained adamant through years of negotiations with Australia that it will only consider onshore processing of Greater Sunrise oil and gas on Timor-Leste’s south coast, an option considered commercially unviable by the consortium.

In March, Gusmão accused Australia in a fiery public letter of colluding to favour onshore processing in Darwin, Australia – a move he said would hand Australia $20 billion in downstream revenues that should go to Timor-Leste.

“We have significant concerns regarding both the approach that was taken in considering the development concepts as well as the technical and commercial assumptions and conclusions which the experts arrived at,” Gusmão wrote to the United Nations Conciliation Commission, which mediated the boundary dispute between the two countries.

“Rather than working on both development concepts in an equal and balanced way, the Commission’s efforts have been focused on building up the [Darwin LNG] concept, to the neglect of [Timor-Leste LNG].”

ConocoPhillips has reportedly been the “main opposition” from the four consortium partners to Timor-Leste onshore processing, indicating that the sale improves Timor-Leste’s chances of securing its Timor-Leste LNG concept. ConocoPhillips operates a gas processing plant in northern Australia – the most likely site for Australian onshore processing of Greater Sunrise resources.

Interfax Natural Gas Daily reported back in August that Timor-Leste was considering Korean financing for Greater Sunrise’s development and exploring separately the possibility of buying out ConocoPhillips’ and Shell’s respective 30% and 28.5% shares in the venture, worth an estimated $5 billion.

Woodside holds a 34.5% share in Greater Sunrise and Osaka Gas owns 10%.

Observers have been wary about Timor-Leste’s refusal to consider onshore processing at the ConocoPhillips-owned gas plant near Darwin in Australia’s far north, widely seen as a cost-effective way that would allow oil and gas extraction to begin earlier.

But onshore processing is seen in Timor-Leste as a final step in the country’s long march to independent sovereign rule.

“From where we stand now, the [Timor-Leste LNG] concept remains as the only option on the table that will bring transformative socio-economic benefits to our nation,” Gusmão wrote in the March letter.

The March maritime boundary agreement put the Greater Sunrise fields almost entirely within Timor-Leste’s waters.

Neither country has ratified the maritime boundary agreement, which would require the finalisation of transitional agreements for the management of all resources currently being exploited in the Timor Sea.

On a July visit to Timor-Leste, former Australian foreign minister Julie Bishop told reporters she had tabled the treaty in parliament and was expecting it to be ratified by the end of 2018 and confirmed that Australia would be playing no further part in Greater Sunrise development.