MELBOURNE, Jan. 13 -- The governments of Timor-Leste and Australia have signed an accord to share royalties on a 50-50 basis from Woodside Petroleum Group's Greater Sunrise gas fields in the Timor Sea.
The field straddles the offshore border between Australian waters and the joint development zone, the Timor Gap, administered by both countries.
The accord also puts aside the pursuit of conflicting maritime boundary claims between the two nations for a period of 50 years as long as the field development goes ahead within 10 years of the treaty's taking effect.
The deal replaces an agreement signed in March 2003 whereby Timor-Leste would receive only 18% of the Greater Sunrise royalties. This arrangement was ratified by the Australian parliament but never presented to the Timor-Leste parliament because it was regarded as unfair.
Timor-Leste Prime Minister Mari Alkatiri is now confident this new accord will be ratified by his country's parliament. He said he still expects tough questioning from members who wanted gas from the Greater Sunrise project to be processed in Timor-Leste rather than Australia.
Woodside has said previously that piping the gas across the Timor Trench to Timor-Leste would not be economical. It would rather pipe the gas to Darwin for treatment—probably involving an expansion of the existing ConocoPhillips treatment plant at Wickham Point. ConocoPhillips and Osaka Gas Co. also are members of the Greater Sunrise consortium.
Woodside stopped work on the $3.7 billion project a year ago because of the sovereign risk involved. Although the new accord might help clear away some perceived problems, Woodside is now heavily committed to bringing on stream its Pluto and Browse basin projects off Western Australia.
Consequently, there is no guarantee of an immediate restart of the Greater Sunrise development, although there is speculation that Woodside might consider selling its interest as it did in Blacktip gas field in the Bonaparte Gulf late last year.
In that case, ConocoPhillips is considered a candidate to increase its stake and proceed with the project.