Timor Sea oil project to proceed: Woodside

Timor Sea oil project to proceed: Woodside

PERTH (Dow Jones): Woodside Petroleum Ltd., an Australian oil and gas producer, Wednesday said the unstable political situation in East Timor will not affect the proposed startup of its A$1.37 billion Laminaria oil development in the Timor Sea.

Laminaria's production vessel, the Northern Endeavour, will leave its Singapore berth in the "next couple of days" to begin a two week journey to the field, Woodside Managing Director John Akehurst told Dow Jones Newswires.

"We will be taking it directly to the field and it will be mobilized for the start-up process. So at this stage there are no recognized impediments to that happening," he said.

The Northern Endeavour will be operating in Australian waters near the boundary of the so-called Zone of Cooperation between Indonesia and Australia in the Timor Sea.

The field is roughly 250 kilometers from Kupang in West Timor and 550km from Darwin in Australia.

Woodside hopes to have Laminaria in production by the end of October or the beginning of November, and production is expected to rise to around 140,000 barrels a day next year.

Woodside owns 50 percent of the project, with the remainder held 25 percent each by Broken Hill Proprietary Co. (BHP) and Royal Dutch Shell Group (RD).

Akehurst said Woodside is seeking to match its 1998 net profit of A$300 million, but whether it reaches that target will depend on how smoothly Laminaria comes into production.

"We set ($300 million) as a target and it would be a good outcome for us, having had no oil production in the first half of the year. But the critical aspect will be the start-up performance of Laminaria," Akehurst said.

Profit for the first six months of 1998 was down 11.9% to A$123.8 million from A$140.6 million a year before, after crude oil production was temporarily shut down for maintenance.

Akehurst said it is unlikely Japanese power utilities will sign up this year for expanded liquefied natural gas production from the Woodside-operated North West Shelf project, despite recent progress in the long-running sales negotiations.

"We do seem to have engaged in a much more detailed and specific dialogue with our Japanese customers, and they are now at a point where the gas utilities are keen to commit to additional supplies in 2004," Akehurst said.