By the OGJ Online Staff
LONDON, Dec. 21 -- The long-delayed project to build a $1.5 billion pipeline to bring gas from the Bayu-Undan field in the Timor Sea to Darwin in northern Australia has been approved by Phillips Petroleum Co. following the settlement of a dispute over the tax regime involved with the East Timor Government.
In a statement issued Friday, Phillips said it welcomes the tax and fiscal package offered by East Timor's Council of Ministers.
However, the deal must first be ratified by Australia, which will share the revenue from the gas project with East Timor before contracts for the development can be placed.
Negotiations on behalf of the East Timor government have been conducted by the United Nations, which became involved in the issue 6 months ago when the participants in the project said that its viability was threatened. The delay has also threatened the development of other long-term projects in the area, although during the past 6 months negotiations with potential customers for the field's gas have continued.
The Bayu-Undan field contains estimated reserves of 400 million bbl of condensate and LPG and 3.4 tcf of gas. The field is located in 80 m of water about 500 km north west of Darwin and 250 km south of Suai, East Timor.
The Bayu-Undan project co-venturers are Phillips as operator with 50.3%, Santos Ltd.11.8%, Inpex Ltd.11.7%, Kerr-McGee Corp.11.2%, Petroz Ltd.8.3% and Agip SPA 6.7%.
Santos managing director John Ellice-Flint also expressed pleasure with the settlement.
"The next step is to formalize the arrangements with the East Timor and Australian governments, clearing the way for efforts to negotiate gas sales agreements that will secure development of the project," he said.
"Development of Bayu-Undan gas reserves along with other Timor Sea gas resources remains a high priority for Santos. Commercialization of Bayu-Undan gas is the next step for the participants, East Timor and Australia in realizing value from the world-class Timor Sea gas resource."
Meanwhile, Phillips and Conoco Inc. formed CorvettePorsche Corp. to serve as a parent company in their pending merger. CorvettePorsche has two divisions, Corvette into which Conoco is to be merged; and Porsche, into which Phillips will merge. Once those mergers are completed, the parent CorvettePorsche will then be renamed ConocoPhillips, officials told OGJ Online.