SINGAPORE: East Timor, locked in a dispute with Woodside Petroleum Ltd. over a liquefied natural gas venture, will consider the Australian company’s proposal to liquefy the fuel on a ship instead of an onshore plant.
“We will reach an agreement by early next year, Jose Ramos-Horta, the nation’s outgoing president,” he said today in an interview.
“It is in our common interest to develop that area in such a way that’s fair, equitable and brings real tangible benefits to our people.”
Ramos-Horta’s remarks signal a shift in the Southeast Asian nation’s stand on the Sunrise project, which straddles a boundary between Australian waters and an area jointly managed by the two countries. East Timor, which became a sovereign state in 2002 and depends heavily on oil and gas revenue, had previously insisted that an LNG plant be built on its soil.
Woodside, Australia’s second-largest oil and gas producer, and its partners including Royal Dutch Shell Plc, have opted to use floating LNG technology for Sunrise, saying it would deliver the most revenue to both the countries.
“We should consider it as long as the other side is prepared to look at an integrated arrangement where East Timor will continue to benefit from downstream activities, such as supply services based on East Timor,” said Ramos-Horta, who recently lost a re-election bid and will be replaced on May 20 by Jose Maria Vasconcelos. Ramos-Horta said he has not ruled out staying involved in politics.
Talks are on with both governments after a February meeting with East Timor Prime Minister Xanana Gusmao, Perth-based Woodside said today in an e-mailed statement. The discussions have yet to result in an agreement, the company said.
“With the genuine intention by all parties to engage in dialogue, it’s possible to arrive at a mutually beneficial development outcome,” according to the e-mail.
Piping the gas to East Timor for processing is still a commercially sound plan, Ramos-Horta said. The cost of building a pipeline and liquefaction plant on East Timor would be about US$13 billion, he said. While Woodside has estimated a similar price for the floating LNG option, the final cost would be far higher, he said.
“I guarantee you it will be 30 to 50% above the projected cost,” Ramos-Horta said of a floating LNG project. “We have not been shown evidence that there are cheaper and better options than a pipeline coming to Timor Leste.” (Bloomberg/T03)
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