E. Timor set to reap US$3.1b after gas deal approval<\/p>\n
Agence France-Presse, Sydney<\/p>\n
Impoverished East Timor is set to earn US$3.1 billion in oil
\nand gas tax royalties following the clinching of an deal between
\nU.S.-based Phillips Petroleum and two Japanese gas companies.<\/p>\n
Phillips' Australian subsidiary, Darwin LNG, has struck an
\nagreement to sell three million tons annually of liquefied
\nnatural gas (LNG) from the Bayu-Undan project in the Timor Sea
\nover 17 years to Japan's Tokyo Electric Power Co. (TEPCO) and
\nTokyo Gas Co. (TGC).<\/p>\n
Darwin LNG said the project still needs the endorsement of the
\nAustralian government.<\/p>\n
The office of Australian Treasurer Peter Costello and the
\nForeign Investment Review Board routinely assess the impact of
\noffshore investors in specific projects affecting the \"national
\ninterest\".<\/p>\n
\"Gas deliveries from the field are expected to begin in late
\n2005, Darwin LNG said in a statement.<\/p>\n
\"This agreement commits nearly 100 percent of the proven
\nreserves of this field.\"<\/p>\n
Australia's share of royalties from the project over the 17
\nyears is anticipated to be around A$2 billion, while East Timor
\nwill receive A$6 billion.<\/p>\n
The total cost of the project will be around US$3 billion,
\nincluding the construction of a pipeline connecting the Bayu-
\nUndan field with a giant LNG plant to be built near the northern
\nAustralian city of Darwin.<\/p>\n
The president of Darwin LNG, Stephen Brand, described the
\nagreement as \"a major milestone in realizing the full value of
\nthe Bayu-Undan field to the mutual benefit of East Timor,
\nAustralia and the field participants.<\/p>\n
\"Development activities can immediately begin for both the LNG
\nplant and pipeline projects.\"<\/p>\n
The Bayu-Undan field contains estimated reserves of 400
\nmillion barrels of condensate and liquefied petroleum gas and 3.4
\ntrillion cubic feet of natural gas. It lies about 500 kilometers
\n(300 miles) northwest of Darwin and 250 kilometers south of Suai
\nin East Timor.<\/p>\n
Phillips, the major stakeholder in the project, shelved the
\nproject last August in a dispute over East Timor's tax regime,
\nciting a corporate tax rate of at least 40 percent as a major
\ndisincentive to continuing its efforts to exploit oil and gas
\nreserves in the Timor Sea.<\/p>\n
East Timor has been administered by the United Nations since
\nits bloody 1999 secession from Indonesia but is due to become
\nindependent on May 20.<\/p>\n
The earlier delay in the pipeline project threatened an
\nestimated US$6.5 billion worth of downstream investment in both
\nEast Timor and Australia.<\/p>",
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"sponsor": "Okusi Associates",
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