E. Timor set to reap US$3.1b after gas deal approval
E. Timor set to reap US$3.1b after gas deal approval
Agence France-Presse, Sydney
Impoverished East Timor is set to earn US$3.1 billion in oil
and gas tax royalties following the clinching of an deal between
U.S.-based Phillips Petroleum and two Japanese gas companies.
Phillips' Australian subsidiary, Darwin LNG, has struck an
agreement to sell three million tons annually of liquefied
natural gas (LNG) from the Bayu-Undan project in the Timor Sea
over 17 years to Japan's Tokyo Electric Power Co. (TEPCO) and
Tokyo Gas Co. (TGC).
Darwin LNG said the project still needs the endorsement of the
Australian government.
The office of Australian Treasurer Peter Costello and the
Foreign Investment Review Board routinely assess the impact of
offshore investors in specific projects affecting the "national
interest".
"Gas deliveries from the field are expected to begin in late
2005, Darwin LNG said in a statement.
"This agreement commits nearly 100 percent of the proven
reserves of this field."
Australia's share of royalties from the project over the 17
years is anticipated to be around A$2 billion, while East Timor
will receive A$6 billion.
The total cost of the project will be around US$3 billion,
including the construction of a pipeline connecting the Bayu-
Undan field with a giant LNG plant to be built near the northern
Australian city of Darwin.
The president of Darwin LNG, Stephen Brand, described the
agreement as "a major milestone in realizing the full value of
the Bayu-Undan field to the mutual benefit of East Timor,
Australia and the field participants.
"Development activities can immediately begin for both the LNG
plant and pipeline projects."
The Bayu-Undan field contains estimated reserves of 400
million barrels of condensate and liquefied petroleum gas and 3.4
trillion cubic feet of natural gas. It lies about 500 kilometers
(300 miles) northwest of Darwin and 250 kilometers south of Suai
in East Timor.
Phillips, the major stakeholder in the project, shelved the
project last August in a dispute over East Timor's tax regime,
citing a corporate tax rate of at least 40 percent as a major
disincentive to continuing its efforts to exploit oil and gas
reserves in the Timor Sea.
East Timor has been administered by the United Nations since
its bloody 1999 secession from Indonesia but is due to become
independent on May 20.
The earlier delay in the pipeline project threatened an
estimated US$6.5 billion worth of downstream investment in both
East Timor and Australia.