UNTAET: Timor Sea (Fact Sheet 18)
All of the fact sheets can be downloaded
in PDF format at
UNITED NATIONS TRANSITIONAL
ADMINISTRATION IN EAST TIMOR (UNTAET)
OFFICE OF COMMUNICATION AND PUBLIC INFORMATION (OCPI)
Not an official document. For information purposes only.
FACT SHEET 18
By UNTAET Press Office
• On 5 July 2001, representatives of UNTAET/East
Timor and Australia initialed the
Timor Sea Arrangement, a document that will govern petroleum operations
in the Timor Sea between East Timor and Australia. This is the first time
that the United Nations has negotiated a bilateral treaty on behalf of
a soon to be independent country.
The negotiating team included East Timorese leaders and UN officials.
• The Arrangement, once it is ratified as a Treaty upon East Timor’s independence, will replace the February 2000 UNTAET-Australia Exchange of Notes. The Exchange of Notes continued the terms of the 1989 Timor Gap Treaty between Australia and Indonesia for the period of East Timor’s transition to independence. East Timor is now expected to gain independence on 20 May 2002.
• Under the Arrangement, East Timor will
receive 90% of oil and gas production in the Joint Petroleum Development
Area (JPDA) while Australia will receive 10%. East Timor will receive
90% of production from the Bayu-Undan field, which lies wholly within the
JPDA. The Greater Sunrise field, which straddles the JPDA, will be unitized
on the basis that 20% lies in the JPDA and 80% is attributed to Australia.
Therefore, East Timor will receive 90% of 20% of Greater Sunrise production (i.e., 18%).
• The Arrangement also provides for the
continuation of contracts held by companies under the 1989 Treaty for the
Bayu-Undan and Greater Sunrise fields. The Bayu-Undan field, operated by
Phillips Petroleum Company Australia Pty Ltd (a subsidiary of the US-based
Phillips Petroleum Company), has estimated reserves of 400 million barrels
(mmbbls) of condensate and liquid petroleum gas (LPG) and 3.4 trillion
cubic feet (TCF) of gas. The current participants of Bayu-Undan are Phillips
(50.3%), Santos (11.8%), Inpex (11.7%), Kerr-McGee Corp. (11.2%), Petroz
(8.3%) and Agip (6.7%). The Greater Sunrise field, operated by Woodside
Australian Energy, has reserves estimated to be 321 mmbbls of condensate
and 9.16 TCF of gas.
The current participants in Greater Sunrise are Woodside Energy (33.4%), Phillips Petroleum (30%), Royal Dutch/Shell Group (26.56%) and Osaka Gas (10%).
• The first significant petroleum development in the JPDA to go forward is the gas recycle phase of the Bayu-Undan field. In 2004, this project is expected to begin producing and processing the gas, separating and selling the liquids, and reinjecting the gas back into the reservoir. The estimated benefit to East Timor from the gas recycle development is approximately US$ 2 billion over the 15-year life of the field. Development of the gas in the Bayu-Undan field could bring in significant additional revenue to East Timor. The current annual budget of East Timor is US$ 63 million, derived largely from donor assistance.
• Following the initialing of the Arrangement, the East Timor negotiating team entered into discussions with the operators of the Bayu-Undan and Greater Sunrise fields with respect to the application of East Timor’s tax system. Topics included the valuation of gas for tax and production-sharing purposes since existing contracts focused on crude oil rather than gas.
• On 31 July 2001 Phillips Petroleum deferred indefinitely a decision to build a pipeline from the Bayu-Undan field to Darwin, Australia. Phillips Petroleum indicated that the decision related to the need for a satisfactory resolution of East Timor’s tax regime. Other factors were, however, related to this deferral, including the need for Phillips Petroleum to work with prospective gas customers to secure the appropriate value for the project. Another significant factor was the uncertainty as to whether the Greater Sunrise field would be developed together with the Bayu-Undan field, as suggested in Phillips Petroleum’s proposal to build an onshore liquefied natural gas (LNG) plant in Darwin, or independently, as suggested in Shell Development (Australia) Pty Ltd’s proposal for a floating LNG plant. The Greater Sunrise joint venture has not yet decided as to which proposal will proceed.
• Much progress has been made in recent talks between East Timor and representatives of petroleum companies on outstanding issues. East Timor believes that a successful outcome in this regard can be achieved soon. The Second Transitional Government of East Timor, sworn in on 20 September, has indicated its willingness to ensure that East Timor’s tax regime provides oil companies with a fair rate of return. The Government has stressed the great importance to East Timor of gas development in the Timor Sea as a major source of future revenues.
For More Information:
20 A Popular Challenge to UNTAET’s Achievements Statement
added Sep 20
"UNTAET has recently published in the September issue of its broadsheet Timor Tais 20 of the UN’s major achievements in East Timor. Many of these achievements are either misleading or things that UNTAET has been forced to do under pressure from Timorese people, civil society and leaders and international critics. It is time for UNTAET to be held accountable, once and for all, for not fully achieving its mandate, and for now preparing to withdraw and redefining its mandate according to the few things it has done rather than what it was supposed to do."
BD: TIMOR OIL / Mina iha Timor Gap / O Petróleo do Mar de Timor / Le pétrole de la Mer de Timor - A collection of recent reports, position statements, petitions, articles and news