From the Melbourne Age, 18 August 2011

Woodside to seek East Timor revival

Peter Ker  
August 18, 2011
The Age Business 15th of June 2003,  Bayu-Undan gas field, Timor Sea.  Liquefied natural gas project; LNG;  platform; rig; brilliant sunset
Woodside is hoping to lift the clouds over its Sunrise project.

NEW Woodside Petroleum boss Peter Coleman will make a diplomatic visit to East Timor in an attempt to revive hopes of building a big gas project in the waters between the tiny nation and Australia.

Mr Coleman's promise to meet East Timor Prime Minister Xanana Gusmao in the ''not too distant future'' came as Woodside revealed a first-half profit of $US828 million ($A791 million)

The solid result was broadly in line with the expectations of analysts, who were more focused on Mr Coleman's outlook for Woodside's suite of ambitious gas projects, Pluto, Browse and Sunrise.

While some minor deadlines continue to slip, most analysts were relieved that Mr Coleman had no further major delays to the Pluto LNG project to report. In June the project was revealed to be a year behind a schedule and $900 million over budget.

Mr Coleman said Woodside still did not have enough of its own gas to build the second stage of the Pluto project, but he said negotiations to source the required gas from neighbouring companies were close to completion.

Woodside has been expected to make a final investment decision on the second stage of Pluto this year, and to start ordering the ''long-lead items'' this month. Mr Coleman was unable to guarantee those timelines yesterday, but analysts at Goldman Sachs were not deterred, saying, ''We believe Pluto is a viable expansion opportunity, and view the current share price as a compelling entry point for investors.''

Mr Coleman said he still expected to make a final investment decision on the $35 billion Browse LNG project in mid-2012, despite conceding that the schedule was ''a challenging one''.

The Sunrise gas project - which straddles Australia's territorial border with East Timor - is one of the most uncertain projects on Woodside's books, due to disagreement between the company and the East Timor government over where the gas should be processed.

East Timor wants a processing plant to be built on its shores to stimulate its economy, and has been angered by Woodside's insistence on using a floating LNG plant.

Mr Coleman said he would travel to East Timor to better understand the nation's concerns, and to try and find a ''circuit breaker'' to the impasse. He rejected suggestions he was about to cede ground over the floating option. ''It's too early for us to move away … we really do believe we have the right development concept.''

Goldman Sachs said market sentiment on Woodside's growth projects might improve from this point, after a horror four months when a sceptical market gutted Woodside's share price by more than 40 per cent. The shares closed 44¢ higher last night at $37.76.