Oz, Timor-Leste Sign Maritime Treaty
Australia and Timor-Leste August 30 signed in Dili the treaty pertaining to the settlement of the maritime border dispute between the two nations.
The treaty permanently delimits the continental shelf boundary and the exclusive economic zone boundary between Australia and Timor-Leste. This will also allow for a future adjustment of the lateral continental shelf boundaries subject to specific conditions being met; and establish the Greater Sunrise [gas field] Special Regime.
“This agreement removes several hurdles for the Sunrise and Buffalo projects – it defines the border and formalises the governance structure and tax sharing arrangement between the two countries. Before either project can be sanctioned each project must agree to PSC terms, finalise the development concepts and complete engineering studies,” consultancy Wood Mackenzie said in a note.
Timor-Leste's economy is underpinned by a petroleum fund that will see no additional revenue once the Bayu-Undan field ceases in 2022. As a result, development of Greater Sunrise is top priority, it added.
Woodside, the upstream operator of Greater Sunrise, has indicated it will not invest in an LNG plant onshore Timor-Leste. “We expect Woodside will initially pursue a liquids-stripping project, monetising the large liquid resource upfront. On a later timeline, the gas resource will be produced via the onshore liquefaction plant,” WoodMac said.
In April this year, the government of East Timor completed the purchase of ConocoPhillips' 30% interest and Shell Australia's 26.56% interest in the Greater Sunrise fields, giving Timor Gap, the national oil company of Timor-Leste, a 56.56% interest in the fields. The government agreed in November 2018 to pay Shell $300mn for its 26.56% stake in the Greater Sunrise field, a little over one month after it agreed to pay ConocoPhillips $350mn for its 30% interest in the same asset.
Australia's Woodside operates the undeveloped Greater Sunrise project with a 33.44% interest, while the other non-state partner is Japan's Osaka Gas with 10%. The fields, 150 km southeast offshore Timor Leste and 450 km northwest of Darwin in Australia, were discovered in 1974 and hold gross contingent resources of 5.13 trillion ft3 of gas and 225.9mn barrels of condensate.
Meanwhile, Santos in a separate statement said that it had signed agreements supporting the transition to permanent maritime boundaries between Australia and Timor-Leste and a continued stable framework for petroleum activities in the Timor Sea.
The company joined with its Bayu-Undan joint venture partners and the Australian and Timor-Leste governments, in agreeing to the Bayu-Undan natural gas project operating in Timor-Leste's exclusive maritime jurisdiction under terms equivalent to previous arrangements.
"The transition agreements bring the certainty and stability needed for ongoing operations at Bayu-Undan and a clear pathway for future resource development in the waters of Timor-Leste," Santos CEO Kevin Gallagher said.
The Bayu-Undan upstream facilities now fall entirely within Timor-Leste's jurisdiction, whilst the Bayu-Undan to Darwin pipeline, including the small portion within Timor-Leste's sovereign waters, will be subject to Australia's exclusive jurisdiction. Santos has an 11.5% interest in the Bayu-Undan JV and a similar interest in Darwin LNG.