Natural gas processing in East Timor will be US$5 billion more expensive

7 June 2010

Sydney, Australia, 7 Jun – Woodside oil company president Don Voelte has stated that processing natural gas in East Timor will cost US$5 billion more than the company’s option for a floating platform, the Australian press reported on Friday.

Woodside leads the consortium to exploit natural gas from the Greater Sunrise field. According to the press reports, Voelte said that the alternative of processing the gas in East Timor, as preferred by the Timorese government, had been “exhaustively studied” but presented “technical risks” and has more capital costs than a floating platform.

“We discovered that there was no technical impediment for the gas to be processed in East Timor. However, it costs more capital, about US$5 billion, compared to the floating platform, and presents technical risks,” Voelte asserted during a conference on resources in Sydney.

“The option for a floating LNG platform is more solid economically, maximises total revenues for Australia and East Timor and return for the Sunrise consortium,” he said.

The figures he presented indicate that East Timor would earn nearly US$13 billion from development of the Sunrise project, while Australia would earn US$ 19 billion over the project’s lifetime. About 82 percent of the gas reserves to extract lie in Australian waters.

An East Timor government spokesman denied last Friday that processing Greater Sunrise field natural gas on land would be US$5 billion more expensive than on a floating platform.

Agio Pereira, who is also state secretary for the East Timorese Council of Ministers, was reacting to the Woodside president’s statements, which he labelled “incomplete and misleading”.

Pereira said that a comparison of financial frameworks shows that the natural gas processing unit in East Timor is the most attractive economic option, offering a better rate of commercial return, with a 10 percent applicable tax rate, besides lower salary and maintenance costs. (macauhub)