East Timor’s NOC calls Woodside ‘corporate bully’ in latest Sunrise LNG spat

East Timor’s nationwide oil firm (NOC) Timor GAP has branded Woodside Power (ASX:WDS) a “company bully” after the Australian LNG developer refused to conform to a production-sharing contract (PSC) that will commit gasoline from Higher Dawn to be processed onshore East Timor.

On 23 November, Timor GAP’s administration staff initiated a vote of the Higher
Dawn Joint Enterprise (SJV) companions on its proposal to incorporate a particular provision within the new PSC, which must be signed earlier than any growth of Higher Dawn can progress.

“This provision commits the SJV, Australia and Timor Leste to agreeing that the gasoline from the Higher Dawn fields shall be piped to, and processed onshore, Timor Leste. Woodside and Osaka Fuel voted NO. They declare they need extra research. Timor GAP believes this can be a traditional instance of a company bully holding a poor, creating nation to ransom simply to engorge their stability sheet,” Timor GAP stated in a press release, on 2 December, posted on Linkedin.

Timor GAP, which holds a 56.56% share in Higher Dawn, added that “it’s unreasonable for a small shareholder to carry the main shareholder hostage to the small shareholder’s priorities and operational preferences.”

Woodside has a 33.44% stake in Higher Dawn and Japan’s Osaka Fuel holds the stability of 10%. About 70% of Higher Dawn – consisting of the Dawn and Troubadour fields – lies in East Timor’s seabed following a 2018 maritime boundary take care of Australia.

“Timor GAP realises that Woodside has many different competing initiatives, however Higher Dawn is Timor Leste’s solely potential revenue producing mission able to develop. East Timor, also called Timor Leste, “can’t afford any additional pointless delays or be constrained by the actions or inactions of the operator and minority shareholder,” added Timor GAP.

“For the gasoline, after cost-recovery and earlier than taxes, Woodside’s share is 16.7%, Osaka Fuel is 5%, Australia is 15% and Timor-Leste/Timor GAP is 63.3%,” famous the NOC.

“For Woodside, that is simply one other mission. For the folks of Timor Leste, Higher Dawn is an financial crucial that’s desperately wanted to offer income, training, jobs, infrastructure growth, and power safety. Due to this fact, bringing Higher Dawn gasoline to Timor Leste’s southern coast stays the one acceptable possibility for Timor GAP and the Timor Leste authorities,” added Timor GAP.

“Timor Leste’s future prosperity, power safety, and financial independence is intrinsically tied to growth of Higher Dawn and bringing the gasoline to Timor Leste’s southern coast. It’s a technically and commercially viable possibility – supported by impartial technical research produced by world-class engineering corporations and paid by Timor GAP as a result of the operator wasn’t conducting these research,” stated the NOC.

“Very just lately, with stress from Timor GAP to simply accept the outcomes of those world-class research, Woodside proposed that new research be performed. Nevertheless, because the operator, Woodside has had greater than sufficient time and alternative to replace previous research, undertake new research, suggest choices, search settlement from stakeholders, and put together detailed plans for this mission,” continued the NOC.

“Woodside ought to respect Timor Leste’s sovereignty. The time for inaction, extra new research, and excuses has ended. The know-how and expertise are available to securely construct a much-needed, world-class, carbon-neutral, pure gasoline mission within the Timor Sea and onshore Timor Leste. In a Woodside Press Convention, on Thursday, December 1, 2022, the CEO acknowledged that Timor GAP’s research confirmed the technical viability,” claimed Timor GAP.

“She (Meg O’Neill, CEO of Woodside) frightened that the commerciality of a Timor Leste-based mission had been Woodside’s major concern, however the usage of modular LNG crops may enhance that evaluation. Timor GAP has already been contemplating these modular designs. Moreover, the States of Timor Leste and Australia share 50% of the online manufacturing after value restoration, with 70% of that manufacturing share going to Timor Leste. When the worth to the host nation is included, the commerciality mannequin is compelling. Timor GAP will proceed to push for speedy motion, cooperating with the States (Timor Leste and Australia) joint efforts to finish the authorized and monetary regimes in order that the brand new Manufacturing Sharing Contract (PSC) could be signed in early 2023,” stated Timor GAP.

Woodside had beforehand insisted that solely onshore processing of Dawn gasoline in Darwin, northern Australia, can be acceptable, highlighting industrial causes and technical dangers related to a model new growth in East Timor.

Nevertheless, at an investor briefing on 1 December, Meg O’Neill, who was appointed everlasting CEO of Woodside in August 2021, made a big about-turn on the corporate’s place in direction of Dawn growth.

She stated Woodside now recognised the significance of an onshore growth in East Timor for that nation and subsequently Woodside had reopened talks round potential growth ideas for Dawn in East Timor.

© Equipped by Woodside

On the investor briefing, Andy Drummond, head of exploration and growth at Woodside, stated that “the sector has a few growth choices together with sending the gasoline to Australia to leverage current LNG crops or a greenfield LNG practice in Timor Leste. Each have the chance to assist the communities in Timor Leste. The present focus is on agreeing the phrases of the manufacturing sharing contract between the 2 international locations and the three way partnership and choosing the event idea.”

Laying pipelines from Dawn to East Timor, throughout a deep-sea trough, additionally known as a trench, has all the time been an enormous technical problem to any growth within the Southeast Asian nation.

However O’Neill stated that “through the years we’ve checked out Dawn many, many various instances. We’ve achieved technical pipeline research to grasp the feasibility of going throughout the ditch. These research have all the time indicated that with the best will, the best engineering, the best execution plan, that you could execute that scope of labor.”

“The problem has all the time been the economics. In case you have a look at Darwin – so there are two LNG crops in Darwin. They each have port infrastructure. There’s house at each of these places to construct further trains. So the price of LNG processing capabilities – you will have an extended pipeline however you simply must construct a practice, not the entire related greenfield tools which must be inbuilt Timor.”

“That stated, there was a number of work within the trade over the previous few years and you’ll have a look at a few of the issues which have been achieved within the Gulf of Mexico. For instance, modular building, totally different approaches. The Commonwealth LNG mission that we’ve signed offtake agreements with, is one which’s utilizing a modular building and really totally different designs,” she added.

“So the Timorese are very eager to have that growth in nation and we recognise it is a crucial nationwide mission for them, so we really feel prefer it’s acceptable to reopen the idea analysis, perceive the applied sciences, perceive the technical challenges. Look, Timor-Leste has a number of worldwide pals. Worldwide pals might wish to assist with a few of that infrastructure that doesn’t exist right this moment in Timor that will exist if we went to Darwin,” she stated.

© Damon Evans/DCT Media

Certainly, O’Neill’s predecessor Peter Coleman, beforehand stated Woodside might put money into the mission’s upstream part solely, leaving East Timor to finance the onshore export plant on its soil and pipelines. Woodside had indicated that it may first develop the sector’s giant liquids sources, leaving the gasoline to be produced by an onshore LNG export facility at a later date.

Maybe, O’Neill’s speak of East Timor’s “worldwide pals” – which the nation’s management common boasts about – might be a nod for these pals to finance the onshore infrastructure. On a go to to Australia in September, East Timor’s President Jose Ramos-Horta urged Canberra to again the pipeline to East Timor and flagged that Indonesia, South Korea, Japan, and China may grow to be potential buyers in Higher Dawn.

Canberra has acknowledged it has no desire the place the gasoline is processed – in Australia or East Timor. The gasoline and condensate discipline is comparatively insignificant for resource-rich Australia.

Maybe, now’s the time for Timor GAP and President Horta to interact their “worldwide pals” assist for his or her proposed growth of Dawn.

Furthermore, as a number of analysts have famous beforehand, Woodside would most likely be more than pleased to promote its share of Dawn to Timor GAP. This may give virtually whole management of the sector’s growth pathway to East Timor’s NOC.