June 4, 2010 at 10:42 am #2643
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by Ross Kelly Sydney Dow Jones Newswires June 03, 2010
Woodside Petroleum Ltd. (WPL.AU) said Thursday that processing gas from the Greater Sunrise field on East Timorese shores would be A$5 billion more expensive than using a floating liquefied natural gas vessel.
The cost estimate is another salvo fired in a fierce war of words between Woodside and the East Timorese government over where gas from the field should be processed.
In a speech at a conference posted on the Australian Securities Exchange, Woodside Chief Executive Don Voelte continued to talk up the merits of using floating LNG, despite the East Timorese government’s preference for an onshore LNG plant.
He reiterated that studies by the Sunrise joint venture, which also includes ConocoPhillips (COP) and Royal Dutch Shell Plc (RDSB.LN), have shown that using a floating LNG vessel would generate more revenue, not just for the JV but for East Timor.
Voelte said that based on the Sunrise joint venture’s modelling assumptions, development of Greater Sunrise will generate about US$13 billion in royalties for East Timor over the life of the project and about US$19 billion for Australia.
East Timor has previously accused Woodside of arrogance for disregarding its desires and said this week that an onshore plant “is the only way forward”. Woodside and its partners need approval from both the Australian and East Timorese governments before they can develop the resource.
Voelte said that “a detailed analysis” of each development option has been presented to East Timor and Australia. “Now it is time for the regulators to properly consider that analysis,” Voelte said.
His claim is at odds with East Timor’s National Petroleum Authority, which last week disputed Voelte’s claim that Woodside had successfully lodged a development plan with the regulator.
According to the regulator, Woodside failed to provide feasibility studies of other development options, including an East Timorese facility.
East Timor is concerned that floating LNG technology hasn’t yet been used anywhere in the world and has accused Woodside of “suddenly and without explanation” downsizing the size of the Greater Sunrise resource to 5 trillion cubic feet of gas from 8 tcf to make it more appropriate for floating LNG, which is more suitable for smaller, stranded gas resources.
“A mere 150 kilometers off the coast of Timor Leste, onshore development is much more prudent, risk adverse, commercially viable and economically transparent,” East Timor’s Secretary of State Agio Pereira said Tuesday.
Copyright (c) 2010 Dow Jones & Company, Inc.
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