Renewed uncertainty emerges over Greater Sunrise development

There has been renewed uncertainty over the development of the Woodside Petroleum Ltd.-operated Greater Sunrise gas field in the Timor Sea following an East Timorese parliamentary law passed last week. This came in the wake of the resignation of East Timor’s Prime Minister Xanana Gusmao.

There has been renewed uncertainty over the development of the Woodside Petroleum Ltd.-operated Greater Sunrise gas field in the Timor Sea following an East Timorese parliamentary law passed last week. This came in the wake of the resignation of East Timor’s Prime Minister Xanana Gusmao.

There was hope that the leadership change would lead to a diplomatic breakthrough, but the new law established a maritime council with the intent of settling permanent boundaries with Australia in the area now known as the Joint Petroleum Development Area or Timor Gap.

Government spokesman Agio Pereira said East Timor considered the current Certain Maritime Arrangements in the Timor Sea accord (CMATS), which covers the Sunrise area, to be invalid. The treaty put aside the maritime boundary issue for 50 years, but Pereira’s statement throws this arrangement back into contention.

Under CMATS, Australia and East Timor have equal shares in royalties from the 5 tcf of gas in the Sunrise fields. Setting a permanent boundary could shift the resource entirely into East Timorese waters, depending on where it was set, for example along a median line that is common in maritime boundaries elsewhere.

East Timor has been adamant that Sunrise gas be developed through an onshore plant on its southern coast, while the Woodside group favors floating LNG at the field.

Much will hinge on Gusmao’s successor as Prime Minister. There is speculation that the opposition Fretilin party’s Rui Araujo could be elected in a unity government that could be more amenable to discussion on Sunrise and the prospect of a compromise in the national interest.

There is a growing realization within East Timor that the country could run out of oil and money if it continues a hard line approach on the Sunrise development question.

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