December 6, 2000
BY JON LAND
Australian domestic demand for natural gas is projected to steadily increase over the next decade, with the fields off the coast of Western Australia and the Northern Territory — especially those in the Timor Sea — being the alternative source to the diminishing reserves in central Australia and Bass Strait.
Industry bodies such as the Australian Gas Association (AGA) are lobbying the federal and state governments to increase the use of natural gas in power generation, arguing that it is a cheap and environmentally friendly alternative to coal. The AGA wants state governments to adopt a model similar to the Queensland government's Cleaner Energy Strategy, which proposes that by 2005, 13% of the state's electricity be produced from natural gas.
The expected increase in demand for natural gas means that the two main gas fields in the Timor Gap, the Bayu-Undan and the Greater Sunrise fields, will be highly lucrative investments for Phillips Petroleum, Santos, Inpex, Petroz and Kerr-McGee, and British Borneo, which are involved in the Bayu-Undan field, and Shell, Woodside and Osaka Gas, which control the Northern Australian Gas Venture (NAGV), in Greater Sunrise.
Gas supplied by NAGV and Phillips will be used by the Canadian-based company Methanex for a huge methanol and synthetic gas plant to be located near Darwin, the first of its kind in Australia.
Phillips and the NAGV have conducted extensive feasibility studies on the supply of Timor Gap gas to the energy market in the NT and eastern Australia. Woodside has established a special division for the task of expanding its operations.
In March, Pulse Energy was formed, an initiative of United Energy, Energy Partnership, Shell Australia and Woodside. Pulse Energy will have access to up to 10 million energy customers in eastern Australia from January 2001, providing Australia's first large-scale combination of electricity and gas services (with gas in the medium term supplied by Woodside from Timor Sea reserves).
There are also high hopes that gas from developments in the Timor Gap will supplement the gas export trade, of which Australia is a world leader. Woodside is heading the China-Australia Terminal Consortium (a joint venture with Chevron and BHP) which has linked up with the Korea Gas Corporation in a bid to develop a US$500-600 million liquid natural gas receiving terminal and pipeline network based in the southern Chinese city of Shenzen.
According to Woodside, the Guandong project is “expected to set the scene for China becoming a major LNG [liquid natural gas] importer in the future” and that the “consortium also brings with it the support of the Australian government, the Western Australian and Northern Territory governments, making it a formidable bid”.
Timor Gap windfall
The energy exploration companies with interests in the Timor Gap are recording record profits and if the Australian government gets its way the people of East Timor will be denied control over their oil and gas reserves in the Timor Sea. Through the illegal Timor Gap Treaty it signed with the Indonesian government, the Australian government hopes to pocket royalties that would otherwise belong to East Timor.
While a date has yet to be set for the next round of negotiations on the future of the Timor Gap Treaty, there has been no indication that Canberra is prepared to accept either a change in the maritime boundary between Australia and East Timor in line with international norms (along the mid-way line between the two states) or a fairer redistribution of the royalties.
Given the extent of the profits and investments at stake, the companies operating in the Timor Gap have been surprisingly quiet following the first round of talks held in October between the United Nations, East Timorese representatives and the Australian government.
Green Left Weekly emailed and faxed Woodside, Santos, Petroz and Phillips asking their views on the Australian government's position concerning the Timor Gap. Given that the East Timorese leadership has repeatedly stated it wants the projects to go ahead and have promised not to increase the tax rate or levies upon exploration, what does it matter if East Timor gains sovereignty over the oil and gas fields these companies currently have operations in? So far, there has been one “no comment” reply.
As the people of East Timor struggle to rebuild their lives and their nation, it remains the case that a major obstacle to achieving full independence and self-determination is the big-business oriented foreign policy of the Australian government.
[See ASIET's web site at for more information.]