REPÚBLICA DEMOCRÁTICA DE TIMOR-LESTE
Office of the Prime Minister
Friday 16 May 2003
Media Release: Bayu-Undan gas agreement finalised
Today, a meeting of the joint Timor-Leste / Australia commission which governs the area of the Timor Sea Treaty confirmed the conclusion of Bayu-Undan negotiations between the two countries.
The Timor Sea Joint Commission approved the final form of a Production Sharing Contract and Development Plan which will allow the multi-billion dollar Bayu-Undan gas development to proceed.
“This is a very important moment for both Timor-Leste and Australia”, said José Teixeira, Timor-Leste’s Secretary of State for Tourism, Environment and Investment and member of the Joint Commission. “Long term international gas projects are extremely complex, and the negotiations were difficult. But we have reached the right result. The Bayu-Undan gas development provides appropriate risks and rewards for Timor-Leste, Australia, and the investors.”
The Bayu-Undan development will proceed under the terms of the Timor Sea Treaty, which provides for Timor-Leste to receive 90 per cent of production and taxation rights, and Australia 10 per cent. The Treaty governs petroleum production in an area of the Timor Sea which lies on Timor-Leste’s side of the median line between the two countries. The Treaty is an interim arrangement pending the delimitation of permanent boundaries, which Timor-Leste does not have. The Treaty was signed on 20 May 2002 by Timor-Leste Prime Minister Marí Alkatiri and Australian Prime Minister John Howard, and entered into force on 2 April 2003.
The combined gas and liquids development of Bayu-Undan is estimated to bring total revenues to Timor-Leste, over the estimated 17 year life of the field, of US $3 billion. If boundaries are agreed which are consistent with international law, the likely revenues to Timor-Leste from Bayu-Undan will be greater. The Bayu-Undan project will also bring significant economic benefits to Australia, both from upstream revenue and from the proposed location of gas processing facilities in Darwin.
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Media enquiries: Jonathan Morrow, Timor Sea Office +670 723 4153
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)