Sunrise LNG in Timor-Leste: Dreams, Realities and Challenges
A Report by La’o Hamutuk
Appendix 1. Oil and gas in and near Timor-Leste
Large deposits of oil and natural gas under the Timor Sea, in Timor-Leste’s territory as well as that of neighboring Australia and Indonesia, have been explored for more than forty years. Many of the offshore fields are in formerly disputed territory; Figure 26 and Table 12 below list the major known fields which should belong to Timor-Leste under current international legal principles.
During 2006, new exploration contracts were signed for areas in the Joint Petroleum Development Area (JPDA) and in Timor-Leste’s exclusive maritime territory. Timor-Leste also has deposits under its land, including oil and gas seeps which were collected during Portuguese times, but none of these are currently in production. Onshore natural gas could also be processed at an LNG plant built for Greater Sunrise, but it is likely to be much less than what is contained in offshore fields.
In 1991, Indonesia and Australia awarded the first exploration contracts for Timor-Leste’s resources, which they divided according to the illegal Timor Gap Treaty. The companies eager for this stolen oil included Royal Dutch Shell, Woodside Petroleum Ltd. (which later became Woodside Australian Energy), Santos and Phillips Petroleum (later ConocoPhillips), all of whom are still exploring and exploiting Timor-Leste’s maritime petroleum resources. ConocoPhillips’ small Elang-Kakatua oil field was the first. Discovered in 1994, it began making money for Indonesia and Australia in July 1998, and, nearly exhausted, stopped operation nine years later. (For a chronology of these and related events, see Appendix 2.)
The largest field entirely in the JPDA is the Bayu-Undan oil and gas field – 400 million barrels of condensate (liquids) and 3.4 trillion cubic feet of gas. ConocoPhillips and its partners began developing this field in the late 1990s, while it was still stolen territory. Bayu-Undan offshore development continued without interruption during Timor-Leste’s popular consultation, subsequent destruction, and UN transitional government. Liquids production started in 2004. Since 2006, natural gas has been sent by pipeline to Darwin, giving Australia most of the jobs and all the downstream revenues. The gas is liquefied there and shipped to Japan. Production will peak around 2010, and the field will be exhausted by 2024. The project comprises 58% of Timor-Leste’s Gross National Income (GNI), and supplies more than 90% of government income. 
From 1999 through September 2007, Australia has taken in more than US$1.5 billion from Laminaria-Corallina, an oil field much closer to Timor-Leste. (Calculated by La’o Hamutuk based on sales and tax information in Woodside’s filings with the Australian Stock Exchange.  See http://www.laohamutuk.org/Oil/Boundary/laminaria_revenues.htm.) This field, just outside the JPDA and claimed by both countries, is nearly exhausted. Timor-Leste has protested the theft of its resources, but Australia is adamant and Timor-Leste yielded in the 2006 Treaty on Certain Maritime Arrangements in the Timor Sea (CMATS). 
Greater Sunrise, including the Sunrise and Troubadour fields, is the largest deposit in the area. According to the Timor Sea Treaty, 20.1% of Greater Sunrise lies inside the JPDA and 79.9% is outside, in contested waters where Timor-Leste consented to Australian control in CMATS. Woodside has long had a contract to develop Sunrise, but suspended work in 2004 and resumed in 2007, after Australia and Timor-Leste agreed on the ownership and revenue-sharing for the field. Upstream (extraction) revenues will be shared 50/50 between the two countries, but downstream revenue division will depend on where the LNG plant is built.
Timor-Leste, Indonesia and Australia each hope that an LNG plant in their territory could become a regional “hub,” processing gas from several fields in the area. In addition to Bayu-Undan and Greater Sunrise, four other offshore fields may be developed within the next 5-10 years. (See map, Figure 26.) The Australian company Santos has licenses and is drilling exploratory wells in Evans Shoal (estimated to contain 6.6 tcf of gas), Caldita and Barossa in Australian territory, while the Japanese company Inpex has a license for the Abadi field (5.0 tcf), just across the border in Indonesia. Any or all of these could be profitable to process at an LNG plant in Timor-Leste, provided that the companies and the countries where the fields are located are persuaded that this is an economically and politically attractive option.
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)