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Woodside: Timor gas plans not viable
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Shares in Australian oil and gas company Woodside Petroleum closed almost 3 percent lower Thursday after it said two development options for its Greater Sunrise gas field in the Timor Sea were not viable. Woodside is the operating partner in the Sunrise joint venture, which includes ConocoPhillips, Shell and Osaka Gas. The group looked at two proposals -- one based on piping gas 500 kilometers (310 miles) to shore in the northern Australian city of Darwin, and one proposed by Shell to supply liquefied natural gas (LNG) to North America from a floating LNG facility above the field. In a statement Thursday, Woodside said the review had found neither proposal to be viable, and both the Australian domestic gas customers and Shell had been advised of this finding. The partners will now look for customers in Asia. Woodside closed at A$12.00, down 2.91 percent on a day the broader market, measured by the S&P/ASX200, put on 0.44 percent. At one point Woodside shares fell to A$11.78. Blow to East TimorWoodside's announcement is a blow to the economic aspirations of the region's newest nation, East Timor, which became fully independent in May and has been pinning some of its development hopes on oil and gas revenue. (Full story) While most of that is expected to come from the Bayu-Undan field, where gas deliveries are due to begin in 2005, the Greater Sunrise field was also seen as of major potential benefit. Greater Sunrise lies 150 kilometers (93 miles) from East Timor. Under the terms of the Timor Sea treaty with Australia, East Timor gets 90 percent of revenue from oil and gas taken from a 30,000 square kilometer joint development zone -- potentially delivering anywhere from $3 billion to more than $7 billion over the next two decades. But only 20 percent of the Greater Sunrise field is in the joint development zone, with the rest falling in Australian territorial waters because the maritime boundary follows Australia's continental shelf and comes to within 120 kilometers of East Timor. The Dili government remains unhappy with the boundary of the joint development zone. In its statement Thursday, Woodside said the joint venture would now focus on securing ratification of the Timor Sea treaty, securing customers for Sunrise, and finalizing commercial arrangements within the joint venture. Production due in 2008Sunrise had been due to begin production in 2008, but this depended on initial design work going ahead. Woodside has the biggest stake in the Sunrise joint venture, at 33.44 percent, followed by ConocoPhillips with 30 percent, Shell with 26.56 percent and Osaka Gas with 10 percent. Australia's biggest export deal to dateWoodside is also the operator of Australia's biggest energy export site, the North West Shelf fields off the coast of Western Australia. Shell is also an equity partner in that project, along with BHP, BP, ChevronTexaco and Japanese trading houses Mitsui and Mitsubishi. In August, the North West Shelf consortium Australia LNG beat potential suppliers from Indonesia and Qatar to win a $13.5 billion deal to supply LNG to China over 25 years. (Full story) Australian Prime Minister John Howard described the China agreement as Australia's largest single export deal to date. The project also won a deal in November to supply gas to South Korea. (Full story) Separately, Australia-based Santos Ltd. said its Maleo gas field in Indonesia has 250 to 400 billion cubic feet of gas. Though its flow rate is impressive, that means the field is nowhere near the size of the 17 trillion cubic foot North West Shelf. Santos shares closed down 1.15 percent at A$6.03.
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