East Timor Says Gas Plant for Sunrise on Its Soil Would `Catapult' Economy

East Timor President Jose Ramos- Horta said he wants Woodside Petroleum Ltd. and its partners in the Sunrise project off northern Australia to pipe the gas to a plant in his country because it would spur the economy.

“I see the benefits of job creation, catapulting our economy into prosperity,” Ramos-Horta said at a news conference in Canberra today with Australian Prime Minister Kevin Rudd. “I don’t support it out of patriotic duty.”

East Timor is demanding more detailed analysis of the costs of the development options for the Sunrise field, including sending the gas by pipeline to the southeast Asian nation. The proposal by Woodside, Australia’s second-largest oil and gas producer, to use floating liquefied natural gas technology is untested, Ramos-Horta said.

Woodside and its partners, including Royal Dutch Shell Plc, have said that a floating platform in the Timor Sea would be the best commercial option and deliver the most revenue to both Australia and East Timor. The companies ruled out piping the gas to East Timor for processing because that would cost about $5 billion more than the floating LNG plan, Woodside said.

The Australian government doesn’t favor one proposal for Sunrise over another, Rudd said today. The dispute must be settled by East Timor and the companies involved in the project, he said. “That’s the appropriate way for this to be resolved.”

East Timor ‘Vulnerable’

East Timor depends “almost exclusively” on oil revenue from the Bayu-Undan project run by ConocoPhillips, making the country vulnerable, and it must find additional financial sources to support the economy, Ramos-Horta said.

The government is open to dialogue on how to move forward with Sunrise, and Ramos-Horta said he’s confident that East Timor and the venture companies will find a solution.

The nation, one of the poorest in the Asia-Pacific region, is seeking to use petroleum reserves to expand its economy, according to the Australian Department of Foreign Affairs and Trade’s website. East Timor’s fund set up to manage its oil money reached $5.4 billion at the end of 2009, the government said June 19.

East Timor ranked 162 out of 182 countries in the 2009 United Nations Human Development Index measuring life expectancy, literacy and standard of living, the online report shows.

East Timor said yesterday that it will put forward a plan later this year to develop a $3.8 billion oil and gas development hub on the country’s southern coast.

“The consortium allege the pipeline going to Timor Leste is far too expensive, and that remains to be critically analyzed,” Ramos-Horta said today. “Let’s sit down to scrutinize every item of cost of those options and see what makes real sense.”

Australia and East Timor completed a treaty for the administration of the field, which straddles a boundary between Australian waters and an area jointly managed by the two countries. Woodside and its partners have “exclusive rights” to develop the field and sell the gas, according to the company.

Woodside has a 33 percent stake in Sunrise, while ConocoPhillips has 30 percent and Shell 27 percent. Osaka Gas Co. owns 10 percent of the venture.

Floating LNG ‘Best’

The Sunrise companies need to win approval for their development proposals from the governments of East Timor and Australia before they can proceed. Floating LNG satisfies their obligation to develop the Sunrise project to the “best commercial advantage,” Perth-based Woodside has said.

Woodside declined 1.4 percent to A$44.65 in Sydney trading, compared with a loss of 1.6 percent for the S&P/ASX 200 Index.

Sunrise would become the second project, after Prelude, to use Shell’s technology to chill gas to liquid form on board a vessel, The Hague-based company said. The Sunrise floating platform would produce 4 million metric tons of the fuel a year.

A floating LNG facility would be 50 percent longer than the U.S. Nimitz-class aircraft carrier and three times the length of the Sydney Cricket Ground, Woodside’s Chief Executive Officer Don Voelte said in a June 3 speech in the Australian city.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net; Marion Rae in Canberra at mrae3@bloomberg.net

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