Australia, RI see deal on Timor Gap deal by 1998
Australia, RI see deal on Timor Gap deal by 1998
MELBOURNE (Reuters): Australia and Indonesia set yesterday a
target of March 1998 to resolve problems arising from the
production of natural gas in the Timor Gap between the two
countries.
Australian Minister for Resources and Energy Warwick Parer and
Indonesian Minister of Mines and Energy I.B. Sudjana agreed their
countries should benefit equally from the development of the oil
and gas-rich Timor Gap, according to a statement issued after
they met in the northern Australian city of Cairns.
One of the key issues to be tackled is how to calculate
royalties from the giant Bayu-Undan gas field, discovered by The
Broken Hill Proprietary Co Ltd and Phillips Petroleum, and other
gas fields.
"Ministers agreed that the matter needed to be resolved by the
end of March 1998 and any resolution should have regard to the
views of Production Sharing Contractors and the Joint Authority,"
the ministers said in the statement.
"Governments would work toward the objective of equal sharing
between Contracting States of the benefits of the exploitation of
petroleum resources," the statement said.
They added that a final agreement would aim to achieve
"optimum commercial utilization of the exploitation of the
petroleum resources, including the location and technology of any
processing facilities".
Treaty
The Timor Gap treaty between Indonesia and Australia provides
for equal royalty rights for both countries within the Zone of
Cooperation, where the Bayu-Undan field is located.
But it does not say whether royalties should be based on the
value of gas before or after it is processed.
The problem becomes more complicated by the fact that the
unfinished gas might be transported across boundaries within the
treaty area. Under the treaty, royalty shares are set at
different levels depending on the location within the Timor Gap.
Hanging in the balance is a decision yet to be made by BHP and
Phillips on where to site a plant to process Bayu-Undan gas.
Phillips favors processing the gas onshore in Darwin,
Australia. BHP wants to build a liquefied natural gas (LNG) plant
on a reef near the field, about 500 kilometers offshore. Another
option is to build an LNG plant on Indonesia's Timor Island.