Positive signs for Sunrise LNG as Australia, Timor-Leste squash border treaty

Woodside-operated $40 billion Sunrise LNG project has been given a positive sign, as Australia and Timor-Leste agreed to reach a permanent solution on maritime borders in the Timor Sea.

The project stalled due to disputes between the two governments on the maritime boundaries, as Timor-Leste argued that a larger portion of the Greater Sunrise assets should be under its jurisdiction.

In 2006, Australia and Timor-Leste concluded negotiations over a Treaty on Certain Maritime Arrangements in the Timor Sea which established a new, temporary resource-sharing arrangement, but contained a moratorium on negotiations over a permanent maritime boundary for the next 50 years.

It also contained a provision that CMATS could be terminated by either state if a development plan for Greater Sunrise had not been approved within six years after the entry into force of the treaty, for which the deadline passed in February 2013. In addition, Timor Leste considered the treaty void after receiving information that Australia bugged Timor-Lest’s negotiation team during the 2004 negotiations.

In 2013, Timor-Leste commenced arbitration proceedings against Australia at the Permanent Court of Arbitration in The Hague.

Early in 2015, Woodside’s Chief Executive, Peter Coleman, said that no progress is expected to be made in the negotiations between the two governments, however, in September 2016, the Permanent Court of Arbitration on behalf of the United Nations Conciliation Commission ordered the continuation of the compulsory conciliation procedure regarding maritime boundaries in the Timor Sea.

Following a series of meeting during October 2016, the two governments agreed a package of measures, under which the government of Timor-Leste has decided to deliver to the government of Australia a written notification of its wish to terminate the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea.

After years of opposition, Australia’s government recognized Timor-Leste’s right to initiate the termination of the treaty to equally split revenue from the Greater Sunrise fields.

The Reconciliation Commission and the two governments “recognize the importance of providing stability and certainty for petroleum companies with interests in the Timor Sea and of continuing to provide a stable framework for petroleum operations and the development of resources in the Timor Sea,” according to a joint statement.

Resources include the Sunrise and Troubadour gas and condensate fields, collectively known as the Greater Sunrise fields, located approximately 150 kilometers southeast of Timor-Leste and 450 kilometers north-west of Darwin, Northern Territory.

According to media reports, project partners have welcomed the progress, which could lead to an agreement that would enable the commercialization of the Greater Sunrise fields.

The fields were discovered in 1974 and hold gross contingent resources of 5.13 Tcf of gas and 225.9 million barrels of condensate, according to Woodside that holds a 33.44 percent stake in the project.

Other partners in the project are ConocoPhillips (30 percent) Shell (26.56 percent) and Osaka Gas with a 10 percent stake.

LNG World News Staff