Australia to start Timor Gap project

Australia to start Timor Gap project

Agence France-Presse, Darwin, Australia

Work will begin immediately on a huge gas project in Australia's tropical north after the A$2.3 billion (US$1.53 billion) Bayu-Undan development cleared its final hurdle, the project developers said on Sunday.

International oil giant ConocoPhillips announced that it is ready to begin work on the three million-ton per year Liquefied Natural Gas (LNG) plant in Darwin, after receiving final approval from the project's major players.

ConocoPhillips is to build a pipeline from its Bayu-Undan gas field, about 500 kilometers (310 miles) northwest of Darwin in the Timor Sea, to the Darwin facility, which will supply Japanese customers with LNG for 17 years from 2006.

The Bayu-Undan gas field is estimated to contain a massive 400 million barrels of condensate and liquefied petroleum gas and 3.4 trillion cubic feet of natural gas.

East Timor's 90 percent share of revenues from the operation is expected to help lift the embryonic nation from poverty, reaping an estimated $3 billion in revenue from the project over the next 20 years.

"This landmark approval by the Timor Sea Designated Authority marks a significant event for the further development of reserves in the Timor Sea area," ConocoPhillips president Stephen Brand said.

Although Australia will receive only 10 percent of revenues from the field, it will benefit through increased economic activity and new jobs.

The Northern Territory government has estimated 1,000 jobs will be created during the three-year plant construction phase, with 100 workers needed for the plant's operation.

Darwin will also become the major service and supply hub for the plant and pipeline.

The Bayu-Undan field is in the Joint Petroleum Development Area, with production revenue going 90 percent to East Timor and 10 percent to Australia.

John Ellice-Flint, chief executive officer of Santos which holds an 11.8 percent stake in the project, said the final approvals cleared the way for Santos to make its first entry into the global LNG market.

"This is a significant milestone for Santos and establishes LNG as a new cornerstone contributor to group revenue and earnings," he said.

"The approval also signals the start of an additional gas business for Santos in the Northern Territory and South East Asia."

Santos said the combined liquids and LNG project would add over six million barrels of oil equivalent at peak production -- equal to about 10 percent of Santos' 2002 production.