Tempo Semanal Edisaun 143 addendum

Aust Embassy: Greater Sunrise must benefit Timor-Leste

READERS NOTE: Tempo Semanal is aware that it is not typical journalistic practice to directly express a newspaper’s opinion on such topics. The reporter responsible for this story intended the initial phrase of this story’s seventh paragraph to reflect opinions of sources he had consulted with. Tempo Semanal will write a formal correction notice in the next edition (22/06/09).

The Australian Embassy in Dili this week confirmed its government’s partnership with the Government of Timor-Leste to exploit the Greater Sunrise gas field will not commit to develop the field until a mutually viable plan has been established.

A spokesperson for the Embassy confirmed that the two governments are awaiting a presentation by a commercial consortium of their plan for exploitation of the field, which will include where and how they plan to process the gas extracted.

The consortium is led by Australian company, Woodside, and includes the foreign interests of Conoco Philips, Shell and Osaka Gas.

“No decision has been made on where a pipeline will go, or whether the gas will be processed at the site of extraction. This is a commercial decision for the companies involved, in accordance with the treaties,” stated the spokesperson.

The spokesperson also stated that, contrary to recent commentary, the Government of Timor-Leste would not be at a loss if a pipeline from Greater Sunrise was not constructed to Timor-Leste, given arrangements for Australia’s and Timor-Leste’s governments to each receive 50% of petroleum taxation revenues from the area.

“The suggestion that Timor-Leste will not benefit from the development of Greater Sunrise if the pipeline does not come to Timor-Leste is not correct. Shared production revenues from Bayu Undan (from which gas is piped to Darwin, Australia) are already providing the bulk of resources for the government budget through the Petroleum Fund and, with continued prudent management, will do so for many years into the future. Similarly, petroleum taxation revenues from the Greater Sunrise development would be an extremely valuable source of income for Timor-Leste for many years.”

It is this newspaper’s opinion (according to Timorese Government and business sources) that a pipeline to Timor-Leste would benefit this nation in ways other than through these taxation revenues, not least through commercially expressing its population’s national aspirations to retain greater control of resources that lie closer to Timor-Leste than Australia.

In keeping with previous arrangements, the Government of Australia is obliged to include the Government of Timor-Leste in decisions regarding the Greater Sunrise gas field. The Australian Embassy’s response to this newspaper’s questions and an Australian Embassy press release from 2 June have confirmed this, and do not give any indication of behaviour that may jeopardise Timor-Leste’s profits from future Greater Sunrise revenues.

Moreover, the Government of Timor-Leste’s long-term consultation with various interested parties indicates a maturity in its planning strategy that recognises each party’s position and is determined not to be taken advantage of, as may have happened in the past.

In 2004, the Australian company, Woodside, misled the Government of Timor-Leste when it was investigating options for transporting and potentially processing natural resources from Greater Sunrise.

A 2004 Norwegian report into Woodside’s feasibility study earlier that year criticised the company for approximately doubling the cost of constructing a pipeline to this nation’s southern coast from the minimum cost required.

In an exclusive interview with Tempo Semanal this week (see pages one and seven of this edition), Timor-Leste’s Secretary of the State for Natural Resources, Alfredo Pires, confirmed the need to be cautious in future planning, given how important future petroleum revenues are to one of the most underdeveloped nations in south-east Asia.

“Timor-Leste is not a mere stakeholder in the sunrise issue: we are owners,” Mr Pires said.

“We are very concerned of the viability of a project. That is why we have done other studies on the side to prove some suspicions we had. So far those suspicions had been proved correctly.”

“The Timor-Leste option is much more viable than what we’ve been lead to believe.”

In its press release on 2 June, the Australian Embassy stated the Australian Government had not urged Woodside or the Government of Timor-Leste to build a pipeline to Darwin, and did not comment on the integrity of Woodside’s past or present dealings in the Greater Sunrise issue.

“It is the companies who will be taking the risk in investing the billions of dollars required to establish the infrastructure necessary to extract and process the gas, so it is they, not our government, who must determine how best to process the gas,” the spokesperson said.

While at times it may be hard to distinguish between a Government’s interests and those of a company from the same country, this newspaper recognises that the Australian Government acknowledges the Government and people of Timor-Leste’s interests in maximising national benefits from Greater Sunrise exploitation.

According to an interview with Mr Pires in this edition of Tempo Semanal, the Government of Timor-Leste still appears to be pursuing a national pipeline strategy, and is prepared to delay the Greater Sunrise’s exploitation if such a strategy may not benefit Timor-Leste in the manner its people require.