Friday, May 7, 2010

Sunrise decision 'fails legal test'

May 7, 2010

THE regulator of East Timor's petroleum industry has accused Woodside of failing to comply with its legal obligations before announcing plans to build a floating liquefied natural gas platform above the Timor Sea's Greater Sunrise field.

In a confidential letter seen by BusinessDay, the independent National Petroleum Authority criticised Woodside for failing to provide regulators with detailed reports and its findings on all three possible development plans for the field before deciding on the floating platform.

East Timor's leaders have repeatedly demanded the gas be piped to a processing plant in East Timor and say they will not approve either a floating platform or piping the gas to Darwin, which the Woodside-led consortium also considered.

As accusations swirl around the multibillion-dollar joint venture, East Timor's Prime Minister, Xanana Gusmao, refused to meet Woodside chief executive Don Voelte in Dili yesterday, saying he would not compromise the "integrity" of "negotiation mechanisms".

A group of about 200 protesters prevented Mr Voelte (pictured right) and representatives of the other joint-venture partners from leaving Dili's VIP airport lounge for almost two hours yesterday.

After the tense standoff, the group was eventually allowed to leave for a meeting with East Timor's President, Jose Ramos Horta, who has asked for briefings on the project.

"We wanted Mr Voelte and his party to know that Timorese demand the gas be piped to East Timor to promote our economic growth and jobs," said Vincente Mauboci, the group's spokesman.

In a confidential letter dated May 4, Mr Gusmao told Mr Voelte he was "surprised" by the company's announcement about a floating platform and said he was convinced "there must have been a wrongful interpretation" of the Greater Sunrise agreement.

Comments by Mr Gusmao and other East Timorese political leaders about Greater Sunrise have fuelled nationalist sentiment in the nation of 1 million people.

Some influential Timorese believe that development of the field should be delayed and say the government in Dili should not be afraid of walking away from the deal in which East Timor and Australia would equally share $US40 billion ($A44 billion) in revenue.

East Timor is debt free and has almost $US6 billion of oil and gas revenue invested in the US, which is increasing by $US100 million a month.

But local institutions lack the capacity to provide the services and infrastructure needed to lift the majority of Timorese from poverty.

In his letter to Mr Voelte, Mr Gusmao, a former guerilla commander and revolutionary hero, challenged Woodside's pledge that building a floating platform would boost Timorese employment and training skills.

"As far as we know, from 2002 until now, there have only been seven Timorese officers working as trainees in ConocoPhillips," Mr Gusmao said, referring to Woodside's consortium partner.

"This suggests to us that the best we can look forward to under your concept is having another seven Timorese working with you.''

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