Wednesday December 21, 2011

M'sian company close to getting gas pipeline deal in Timor Leste

By RISEN JAYASEELAN
risen@thestar.com.my

PETALING JAYA: A Malaysian company representing Germany's Europipe GmbH, is close to securing a deal to build a much-needed gas pipeline from a massive oil and gas field off the waters of Timor Leste to its mainland, sources said.

Petro-Mekong Corp Sdn Bhd, which has been involved in gas pipeline projects in the region, has been instrumental in promoting the plan for landing the gas on Timor Leste, the sources said, adding that this could potentially lead to other Malaysian companies getting involved in the pipeline project in areas such as pipe coating. Europipe is the world's largest manufacturer of welded large-diameter pipes.

Both parties have conducted a feasibility study for the gas pipeline, which would measure more than 300 km and stretching from the Greater Sunrise oil and gas field to Timor Leste's mainland, the sources added. The cost of the pipeline and pipe laying is estimated at US$1bil to US$2bil, while a further US$5bil to US$6bil is expected to be spent on building gas separation and processing plants on the mainland in Timor Leste.

Another source indicated that the Timor Leste government was also in negotiations with an international resource giant for an offtake agreement to purchase some of the oil and gas that would be processed at these plants.

The pipeline will be built from the massive Greater Sunrise oil and gas field that lies in the sea between East Timor and Australia. It was discovered in 1974 and according to some estimates, holds in excess of 8 trillion cu ft of gas and 290 million barrels of oil. The oil field is closer to East Timor than to Darwin in Australia, where a large processing plant already receives crude oil and gas via another pipeline from a different offshore field in East Timor.

A local newspaper in East Timor recently reported that Prime Minister Xanana Gusmao had told members of parliament there that he was to soon make an official visit to Europipe in Germany to evaluate the commercial and technical aspects of the proposal by Europipe.

Petro-Mekong Corp is a company said to be linked to businessman Datuk Seri Dr Shafiq Sit Abdullah. When contacted, Shafiq declined to comment. Shafiq has had shareholdings in several listed and unlisted companies.

Gusmao, the former guerilla independence hero who was sworn in as prime minister in 2007, has been actively seeking to ensure that a pipeline is built from the Greater Sunrise oil and gas field into East Timor in order for the country to enjoy more economic benefits and spin-offs from its own natural resources.

The East Timor government and Australian oil-and-gas giant Woodside, that has been developing another oil and gas field off the waters of East Timor following an earlier agreement with the then Indonesian-led East Timor government, have been at loggerheads on this issue.

Woodside had said it would prefer to build the first-of-its-kind floating processing plant at the oil field itself at a cost of US$8bil to US$10bil.

Last May, The Australian reported that Gusmao said Woodside was trying to steal East Timor's natural resources from the Greater Sunrise oil and gas field.

“I don't believe Woodside because it is a liar. They intend to steal our oil and gas in the Timor sea as they don't want to bring the pipeline to East Timor,” Gusmao was quoted as saying.

At the recently-held 19th Asean summit in Bali, Indonesia, Asean leaders agreed in principle to admit Timor Leste as a new member to the grouping. Timor Leste's application will, however, have to go through the usual process where Asean will ensure its membership would bring benefits both to the country and the group. At the conference, Malaysia reiterated its support for Timor Leste to join Asean.

The former Portuguese colony of East Timor, annexed by Indonesia as Timor Timur, was wracked by violence before gaining hard-won independence as Timor Leste in 2002. It is the poorest country in the region by a number of benchmarks.