Woodside shares dip after East Timor ultimatum

Australian Woodside Petroleum shares lose ground after East Timor says it will block gas field


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, On Wednesday January 13, 2010, 9:49 pm EST

CANBERRA, Australia (AP) -- Woodside Petroleum Ltd. shares slipped Thursday after East Timor's government said it will block proposals by a consortium led by the Australian oil and gas company to develop a disputed oil and gas field worth billions of dollars.

Proposals to exploit "Greater Sunrise" -- estimated to hold 240 million barrels of light oil and 5.4 trillion cubic feet (154 billion cubic meters) of natural gas -- must be approved by both Timor and Australia, according to a 2007 treaty between the neighboring states.

The deal gives the parties until 2013 to agree upon a joint development plan. But Timor's latest position shoots down all proposals put forward so far by the Woodside consortium which includes Royal Dutch/Shell, Osaka Gas and ConocoPhillips.

In their toughest stance to date, Timor says it will not support Woodside's development plan, possibly rendering the 2007 treaty meaningless.

Woodside shares dropped 0.1 percent to AU$48.52 ($45.08) in morning trading on Thursday, while other resource stocks gained ground on the back of firmer commodity prices.

Resources and Energy Minister Martin Ferguson said on Thursday that Australia was waiting to see Woodside's final plan before passing judgment.

"The government is awaiting a final development proposal from the joint venture and the government remains committed to the treaty," Ferguson said through his spokesman Michael Bradley.

Woodside has said it favors piping Greater Sunrise gas to the Australian city of Darwin or building a floating plant over the gas field so that tankers can be loaded at sea.

East Timorese Secretary of State Agio Pereira said in a statement on Wednesday that neither of those options was acceptable.

His government wants the gas piped to his country.

Woodside said in a statement Wednesday that it is still considering development options with its joint venture partners and will seek to "develop the reservoir to the best commercial advantage, consistent with good oilfield practice."

David Wall, an oil and gas analyst with stockbroking firm Hartleys, said Woodside had previously resisted the Timor pipeline concept because a deep seabed trench between Great Sunrise and the Timor cost made the option uneconomical.

Wall tipped that Woodside would opt for a floating plant.


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