East Timor accuses Woodside


May 7, 2010

The regulator of East Timor’s petroleum industry has accused Woodside
of failing to comply with its legal obligations before announcing
plans to build a floating liquefied natural gas platform above the
Greater Sunrise field in the Timor Sea.

In a confidential letter seen by the Herald, the independent National
Petroleum Authority criticised Woodside for failing to give
regulators detailed reports and its findings on all three possible
development plans for the field before deciding on the floating platform.

East Timor’s leaders have repeatedly demanded the gas be piped to a
processing plant in East Timor and say they will approve neither a
floating platform nor piping the gas to Darwin, which the
Woodside-led consortium also considered.

As accusations swirl around the multibillion-dollar joint venture,
the Prime Minister of East Timor, Xanana Gusmao, refused to meet
Woodside’s chief executive, Don Voelte, in Dili yesterday, saying he
would not compromise the “integrity” of “negotiation mechanisms”.

About 200 protesters prevented Mr Voelte and representatives of the
other joint venture partners leaving the VIP airport lounge in Dili
for almost two hours yesterday.

After the stand-off, the group was allowed to leave for a meeting
with the President of East Timor, Jose Ramos Horta, who has asked for
briefings on the project. “We wanted Mr Voelte and his party to know
that Timorese demand the gas be piped to East Timor to promote our
economic growth and jobs,” said Vincente Mauboci, the group’s spokesman.

In a confidential letter dated May 4, Mr Gusmao told Mr Voelte he was
surprised by the company’s announcement about a floating platform and
said he was convinced “there must have been a wrongful
interpretation” of the Greater Sunrise agreement.

Comments by Mr Gusmao and other East Timorese political leaders about
Greater Sunrise have fuelled nationalist sentiment in the nation of 1
million people.

Some Timorese believe development of the field should be delayed and
that Dili should not be afraid of walking away from the deal in which
East Timor and Australia would equally share $US40 billion ($44
billion) in revenue.

Seven years after obtaining independence, East Timor is debt free and
has almost $US6 billion of oil and gas revenue invested in the US,
which is increasing by $US100 million each month.

But its institutions lack the capacity to provide the services and
infrastructure needed to lift the majority of Timorese from poverty.

In his letter to Mr Voelte, Mr Gusmao, a former guerilla commander
and revolutionary hero, challenged Woodside’s pledge that building a
floating platform would boost Timorese employment and training skills.

“As far as we know, from 2002 until now there have only been seven
Timorese officers working as trainees in ConocoPhillips,” Mr Gusmao
said, referring to Woodside’s consortium partner.

“This suggests to us that the best we can look forward to under your
concept is having another seven Timorese working with you.”

A document being circulated by people close to the government in Dili
says East Timor should not be a test for new technology needed to
build a floating LNG platform, which would be one of the world’s first.

“No one has managed to take a plant the size of 170 soccer fields
that requires 50,000 metres of concrete and 6400 metric tonnes of
structural steel, then shrink it to 4 per cent of its size and send
it 404 kilometres offshore,” the document says.

East Timor’s leaders have also been angered by comments by the Chief
Minister of the Northern Territory, Paul Henderson, that the
consortium’s floating platform decision had secured Darwin the
“second prize” because the project would be serviced and supplied
from northern Australia.

The NT government had hoped the consortium would pipe the gas to
ConocoPhillips’s existing processing plant in Darwin.

The National Petroleum Authority told Woodside that the regulator
required the company to refrain from making any announcements “which
might cause the public and investors to believe that a decision on
the development of the field is imminent.”


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