THE Greater Sunrise joint venture partners are progressing marketing efforts despite having achieved little certainty on development of the Timor Sea project.
The partners – Woodside Petroleum (operator), ConocoPhillips, Shell, and Osaka Gas – have not yet agreed on a development mode.
However, they are confident another significant problem may be resolved soon, now that Federal Parliament has resumed for the year.
The partners need a unitisation agreement to set out the conditions for development of the project, because the project lies across two jurisdictions.
Without such an agreement it is impossible for development to begin.
Large projects such as Greater Sunrise cannot proceed without customer surety, and a Woodside spokesman said the absence of a unitisation agreement for the project allowed competitors to “pick off our weaknesses”.
“Studies during 2002 have shown the potential for Sunrise to be competitive in the international LNG market and our [marketing] efforts can be significantly enhanced with the signing of a unitisation agreement,” he said.
The unitisation agreement is linked to the Timor Sea Treaty, as 20 per cent of the Greater Sunrise project lies within Australian-claimed territory, but the rest within a Joint Petroleum Development Area, determined by the treaty.
The treaty, which determines the proportionate tax and royalty distributions to Australia and East Timor for projects developed within the boundaries of the JPDA, was signed by East Timor and Australia on East Timor’s independence in May last year.
A memorandum of understanding for the agreement, known as an International Unitisation Agreement, was signed at the same time.
Australia’s Timor Sea Treaty Committee recommended in November last year that Australia ratify the Timor Sea Treaty.
It also recommended an IUA for Greater Sunrise be concluded by the end of last year, on or before the ratification of the Timor Sea Treaty.
The Department of Foreign Affairs and Trade, however, admonished the Australian Government not to act in haste, but to ensure the protection of its Greater Sunrise interests.
Hence, although East Timor’s parliament approved the Timor Sea Treaty for ratification in mid-December, Australia has not yet done so. Timor Sea Treaty Committee chair Julie Bishop also believes there have been ongoing and progressive negotiations between Australia and East Timor in the meantime, and that a unitisation agreement acceptable to both nations is imminent.
Ms Bishop said she was expecting to receive a proposed agreement to be referred to the committee for recommendation soon after parliament resumed. As the treaty had already been tabled, the Government only needed an approved and tabled agreement before formally notifying East Timor it would ratify the treaty.
The treaty gives legal and fiscal certainty to oil and gas commercialisation within the JPDA.
Joint venture partners in the Bayu Undan field, which lies wholly within this region, have been waiting for this for a long time.
The first development phase has begun in anticipation, but operator ConocoPhillips and partners including Australia’s Santos have been getting anxious, ahead of a heads of agreement 2006 deadline to deliver LNG to Tokyo Electric Power Company and Tokyo Gas by 2006.
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