Secure signs

WOODSIDE Energy’s regional proposed developments portfolio has gained a significant degree of certainty in the past week.

Australia and East Timor signed an international unitisation agreement (IUA) covering the Greater Sunrise gas project in the Timor Sea, Australia ratified the Timor Sea Treaty, and the North West Shelf venture finalised another sales contract.

East Timor had already ratified the Timor Sea Treaty, so Australia’s signing means that all proposed developments within the joint petroleum development area covered by the treaty can now proceed with a legal and fiscal framework in place.

For Woodside this means it can have the Jahal and Kuda-Tasi oil fields in production as early as next year.

A Woodside spokesman said total recoverable reserves were estimated at 24.5 million barrels – comparatively small – but the fields could be tied back to either Northern Endeavour or the nearby Buffalo development.

In the meantime, the Jahal and Kuda-Tasi partners – Woodside (40 per cent), Inpex (35 per cent) and Santos (25 per cent) – need to sign off on production sharing contracts and agree on development options.

The IUA was required for Greater Sunrise, because 20 per cent of the project lies within the joint petroleum development area.

The spokesman said the certainty it delivered to Woodside was legal and fiscal and this would help with the marketing of the nine million trillion cubic feet of gas.

However, while the IUA is a significant milestone for Woodside and its partners – ConocoPhillips (30 per cent), Shell (27 per cent) and Osaka Gas (10 per cent) – plenty of other uncertainty for the lucrative project remains. As with Jahal and Kuda-Tasi – but with a far more complex history – there are customers to secure, a development option to be agreed, and commercial agreements between partners to finalise.

Asia Pacific markets seem the most likely destination for the gas. The potential of these markets was underscored with the formalisation of an agreement for the NWS venture to supply an annual 500,000 tonnes of LNG over seven years to Korea Gas Corporation.

The Bayu-Undan partners, also now able to progress development with Australia’s ratification of the Timor Sea Treaty, have long-term sales agreements with the Tokyo Electric Power Company and Tokyo Gas.