U.S. firm signs deal on East Timor gas pipeline

U.S. firm signs deal on East Timor gas pipeline

Associated Press, Dili

U.S. energy company Phillips Petroleum Pty. Ltd. said Friday
it had reached agreement with East Timor on a planned
multibillion dollar gas pipeline from the Timor Sea to Australia.

The deal comes five months after Phillips shelved the pipeline
when new financial issues were raised in the Timor Gap agreement
between Australia and the United Nations Transitional Authority
in East Timor (UNTAET).

Phillips and its co-venturers welcomed the East Timor Council
of Ministers' decision to endorse a tax and fiscal package Friday
that will see East Timor receive more than US$3.6 billion in
royalties over 20 years from the Timor Sea oil and gas fields.

The 500 kilometer (310 mile) pipeline - which will link Darwin
with the Bayu-Undan gas field under the sea between Australia and
East Timor - will also underpin A$13 billion ($6.5 billion) in
investment in Australia.

"This marks a historic day in the establishment of the Timor
Sea as an important emerging gas development area," Phillips
president Stephen Brand said in a statement.

"We now await ratification of the agreement by Australia so we
can proceed with finalizing gas sales arrangements that will
secure project development," he added.

The field contains an estimated 400 million barrels of
condensate and liquefied petroleum gas and 3.4 trillion cubic
feet of natural gas.

When the agreement fell through earlier this year, the new
East Timor administration had intended to use its taxation powers
to claw back generous investment incentives offered under the
original treaty between Australia and Indonesia.

Phillips had insisted that business conditions under the new
agreement with the newly independent East Timor be no more
onerous.

Before East Timor became independent, Australia shared Timor
Gap revenues 50-50 with Indonesia.