Site dispute 'delaying Timor gas' - May 8, 2006

GOLD COAST, Australia (Reuters) -- Australia's Woodside Petroleum Ltd. said a disagreement with East Timor over where to build a gas plant was delaying development of the Greater Sunrise offshore gas field, which could deliver nearly $15 billion in revenues to one of Asia's poorest countries.

Agu Kantsler, head of exploration for Woodside, Australia's biggest independent oil company, said East Timor's insistence on building a liquefied natural gas (LNG) plant on its home soil to process gas from the field had put a final decision on whether to proceed with the project in limbo.

Other shareholders in the field, estimated to hold 8 trillion cubic feet of gas and up to 300 million barrels of condensate, are ConocoPhillips, Royal Dutch/Shell and Japan's Osaka Gas Co. Ltd.

Woodside has said it wants to import the LNG to Wickham Point in northern Australia, where a plant already exists for ConocoPhillips's Bayu-Undan project.

"We sit back and wait," Kantsler told Reuters on the side of a gas conference.

"The East Timorese are going to move at their own pace. They would like a lot of the investment to be in East Timor, but the reality is that siting the terminal in Australia is the most economical solution to provide the largest long-term revenue streams to East Timor," he said.

East Timor has argued that transporting the gas via a pipeline to East Timor was commercially feasible.

Greater Sunrise is the Timor Sea's biggest gas resource. Australia and East Timor have signed an agreement to share revenue from the field, located 450 kilometers (279 miles) from the Australian city of Darwin and 80 kilometres from East Timor.

East Timor, which won independence from Indonesia in 1999, stands to earn as much as $14.5 billion in Greater Sunrise gas revenues over 20 years.

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