Leaked report backs East Timor

The report’s findings conflict with a earlier printed estimate suggesting that the LNG challenge development price could be twice as costly, or greater than $US10 billion ($14.3 billion) further, to pipe the fuel from the Timor Sea to East Timor and construct the processing plant on its southern shoreline.

Along with the same upfront capital expenditure prices, the brand new 130-plus web page report estimates the continuing multi-decade working bills for labour and different bills could be cheaper in East Timor.

The proposed Dawn challenge within the Timor Sea is operated by Woodside however 57 per cent owned by the East Timor authorities, after it purchased out Shell and ConocoPhillips in 2018.

The election in Might this yr of President José Ramos-Horta is predicted to revive the challenge and add to stress from East Timor on Woodside and the Albanese authorities for a re-examination of finding the proposed LNG plant in East Timor to generate jobs and financial exercise for the impoverished island nation.

Negotiations between the Australian and East Timor governments on a production-sharing contract for Dawn, about 70 per cent of which lies in East Timor waters below a 2018 maritime boundary deal, have been dragging on for nearly 4 years.

Up to date challenge costings by unbiased power consulting group ERCE estimate that the entire capital expenditure for the LNG challenge development could be $US11.8 billion in Darwin and $US14.1 billion in East Timor, in line with the report finalised for the Timor Hole entity in July 2021.

The $US2.3 billion price differential calculated final yr for development is a fraction of the unique $US10.3 billion distinction ($US20.5 billion in East Timor versus $US10.2 billion in Darwin) primarily based on research and engineering work accomplished in 2015.

ERCE estimates annual working prices for upstream, midstream and downstream fuel processing could be $US1.3 billion a yr cheaper in East Timor at $US5 billion, versus $US6.3 billion in Darwin.

Underlining differing views between Woodside and East Timor, a footnote within the report says a number of the working prices are primarily based on Timor Hole’s “upstream and downstream price estimates which differ from operator” Woodside.

Kick-starting stalled initiatives

A Woodside spokeswoman mentioned on Sunday: “The present focus of the Dawn three way partnership is the finalisation of a brand new Better Dawn Manufacturing Sharing Contract (PSC), which is required below the 2019 Maritime Boundary Treaty (MBT) and is a precursor to future improvement actions being contemplated.

“The Dawn three way partnership continues to interact the Australian and Timor-Leste governments on the brand new PSC.

“The MBT clearly units out the standards in opposition to which any proposed improvement plan will likely be assessed, and we sit up for persevering with to work with the Australian and Timor Leste governments on finalising the brand new PSC.”

Woodside chief govt Meg O’Neill in April known as for “severe consideration” to be given to kick-starting stalled fuel mega-projects, akin to Dawn within the Timor Sea and at Browse off the coast of Western Australia, because the world turns its again on Russian power.

She mentioned the power disaster fuelled by Russia’s invasion of Ukraine “could assist choose up the tempo in progressing these discussions” on the Dawn scheme’s production-sharing contract for the oil and fuel fields within the East Timor Sea.

Nonetheless, any progress on the talks should still go away unresolved the key sticking level of the place the Dawn fuel could be processed. Woodside is adamant that East Timor’s stipulation that an LNG plant is constructed on its southern coast isn’t viable.

“Yeah, that could be a key problem,” Ms O’Neill mentioned in April.

“The economics of taking fuel to Timor Leste and constructing new crops simply are prohibitive – in order that’s one thing that should get cracked – however the PSC phrases have to get sorted out first.

“The sphere is nearer to current LNG infrastructure. There’s probably some attention-grabbing alternatives there to make use of current amenities. So simply from an economics perspective, taking the fuel to Timor-Leste and constructing a brand-new plant simply doesn’t make sense.”

Power business specialists consider the Dawn fuel may very well be used as backfill for the present Ichthys LNG plant off the coast of Western Australia or provide a second liquefaction prepare at Darwin LNG in northern Australia after 2030.

The ERCE report was accomplished in July 2021.

Prices for decommissioning

Since then, the surge in power costs and international inflation for development and labour imply it’s probably that the estimated prices could be costlier in each Darwin and East Timor.

Along with capex and working prices, ERCE consists of potential prices for decommissioning the challenge whether it is deserted later.

The “abex” price for an East Timor challenge is increased at $US1.2 billion, in comparison with $US646 million for Darwin.

In April 2019, East Timor finalised its acquisition of ConocoPhillips’ 30 per cent curiosity and Shell’s 26.5 per cent share in Dawn, giving nationwide power firm Timor Hole a 56.6 per cent curiosity within the fields.

Woodside holds a 33.44 per cent share curiosity, and Japan’s Osaka Fuel owns 10 per cent.

ConocoPhillips had most well-liked processing Dawn fuel on the Darwin LNG plant it operates, however mentioned on the time its exit was primarily based on East Timor’s choice to “develop the Dawn fields by a brand new greenfield, Timor-Leste-based LNG facility”.

“Whereas we differ on the proposed financial improvement possibility, we recognise the significance of Dawn to the nation of Timor-Leste and hope the sale of our curiosity to the federal government permits them to progress their imaginative and prescient for the event of Dawn,” ConocoPhillips’ govt Chris Wilson mentioned in October 2018.

In the meantime, the return to energy in Might of President Ramos-Horta cemented the kingmaker fame of the nation’s first president and former resistance chief Xanana Gusmao.

In early 2020, Mr Gusmao pulled his Nationwide Congress for the Reconstruction of Timor Leste (CNRT) get together out of the ruling coalition in early 2020, resulting in ongoing political instability.

Ought to, as seasoned observers count on, Mr Gusmao emerge as the following prime minister, he’s prone to resurrect his plans for the Dawn oil and fuel subject, together with the onshore processing improvement.