Timor to block Woodside's oil development plans

Proposals to exploit “Greater Sunrise” — estimated to hold 240 million barrels of light oil and 5.4 trillion cubic feet (154 billion cubic meters) of natural gas — must be approved by both sides, a 2007 treaty between the neighbor states.

The deal gives the parties until 2013 to agree upon a joint development plan. But Timor's latest position shoots down all proposals put forward so far by the consortium headed by Australian oil and gas company Woodside Petroleum Ltd.

Timor is already tapping a US$5 billion petroleum fund established with income from another field in the Timor Sea, but the vastly larger Greater Sunrise is seen as key to developing the young democracy and lifting its 1.1 million people out of poverty.

In their toughest stance to date, Timor says it will not support Woodside's development plan, possibly rendering the 2007 treaty meaningless.

“The current proposed plans of Woodside and the consortium partners to pipe gas from the Greater Sunrise field to either Darwin or a floating LNG (liquid natural gas plant) would not be approved by the government,” Secretary of State Agio Pereira said in a statement obtained Wednesday by The Associated Press.

Woodside, which leads the consortium including Royal Dutch/Shell, Osaka Gas and ConocoPhillips, argued that piping the resources to an existing processing plant in Darwin, more than 300 miles (500 kilometers) away, is the most commercially viable option. It has also researched a floating gas processing plant, which would be the first in the world and cost billions of dollars.

But East Timor, an underdeveloped country with no major industry to speak of, wants to run a deep sea pipeline to its coast, about a third of the distance of a pipeline to Darwin in Australia's Northern Territory. It has been looking for commercial partners to develop a multibillion dollar national petrochemical industry that is says would spur economic growth and dent towering unemployment.

With billions of dollars in tax revenue and profits involved, the fight over Greater Sunrise could not be of higher stakes for Timor. The former Portuguese colony broke from Indonesian occupation a decade ago and is struggling to feed, shelter and educate its population.

It ranks among the least developed countries in the world and is the poorest in Southeast Asia.

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