by Reuters, Aaron Sheldrick, Thursday, November 06, 2014
TOKYO, Nov 6 (Reuters) - Australia's Woodside Petroleum and its partners are in talks with the East Timor government about potentially building an onshore liquefied natural gas plant in the country for the long stalled Greater Sunrise Project, Chief Executive Peter Coleman said on Thursday.
His comment, in an interview with Reuters, was the first public confirmation that the Greater Sunrise partners are not completely wedded to building a floating LNG plant, which has long been their preferred option for the stalled project and which has been steadfastly opposed by the East Timor government.
"We have been in discussions with the Timorese around different development concepts, both floating and onshore," Coleman told Reuters on the sidelines of an LNG conference.
East Timor, one of the world's poorest nations, has long pressed for an onshore plant for the Timor Sea gas project that remains undeveloped 40 years after the Greater Sunrise gas fields were discovered, one of several issues blocking progress.
It is also locked in a long-running dispute with wealthy neighbour Australia over revenue-sharing as well as how best to develop the gas fields, located 150 km (90 miles) southeast of East Timor, also known as Timor Leste, and 450 km (280 miles) northwest of Darwin, Australia.
The fields are estimated to be contain more than 5 trillion cubic feet of gas and 226 million barrels of condensates, worth tens of billions of dollars.
The governments recently agreed to adjourn an international arbitration over the dispute for at least six months to try to resolve their differences directly. The dispute stems from East Timor's allegations that Australia used underhand tactics, including bugging government offices in the capital Dili, during the treaty negotiations.
The Greater Sunrise partners have long said they want to see the dispute between the two countries resolved before they sign off on developing the project.
Woodside and its partners would first need to negotiate a fiscal package with East Timor to govern an onshore plant before they launch engineering studies for building a pipeline and onshore plant, Coleman said.
"We have kicked that off. We have set a pretty aggressive timeline to conclude that. We are hopeful in the first half of next year we will have matured that quite a lot," he said of the fiscal package.
East Timor's department of foreign affairs declined to comment earlier this week on whether the country was in talks with Woodside, and government officials could not immediately be contacted after Coleman's comments.
UBS estimates that a floating LNG project would cost $13 billion, while an onshore project would cost more, as Woodside would have build one or two pipelines to the coast of East Timor, crossing the Timor Sea trench, previously seen as technically challenging and expensive.
Woodside has previously estimated that an onshore plant in East Timor would add as much as $5 billion to the projected cost of a floating LNG plant.
Greater Sunrise is 33 percent owned by Woodside, the operator, with ConocoPhillips owning 30 percent, Royal Dutch Shell 26.6 percent and Osaka Gas 10 percent.
(Reporting by Aaron Sheldrick; Writing by Sonali Paul; Editing by Raju Gopalakrishnan)
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