Timor takes aim at Woodside over costs

EAST Timor says Woodside Petroleum's $2 billion cost blowout at Pluto gasfield augurs badly for the planned of the Greater Sunrise field.

Woodside and its joint venture partners, Shell and ConocoPhillips, in April decided to develop the fields through a $US10 billion-plus floating LNG development, angering the East Timorese government, which wants an LNG plant built in the tiny nation.

Yesterday, East Timor used Woodside's November announcement, that flare towers not constructed to specification had pushed out costs to $14bn at Pluto, to help its case.

"This raises concern within the Timorese government, given the potential cost blowouts for the untested floating LNG technology proposed by Woodside for Greater Sunrise, which holds far greater risks than simple flare tower technology," government spokesman Agio Pereira said.

"If similar cost blowouts were to occur with Greater Sunrise, the costs would effectively be paid for by the people of Timor-Leste; before any revenue stream flowed to the nation."

Mr Pereira did not say how the people would pay for the blowouts. The statement is the latest in a steady stream that East Timor has sent since April, when the partners settled on a floating LNG plant as their preferred option.

Shell will build the $US5bn floating LNG plant, while Woodside will oversee construction of the rest of the underwater development. East Timor said Woodside had relented to regulators' conditions in submitting information on the three development options -- floating LNG, an East Timor plant or a Darwin plant -- in recent months.

Woodside said in October that it had handed over the concept evaluation report.

It is understood the eventual report was basically the same one Woodside delivered in April, only for its executives to have the document thrown back into their cars as they were leaving by security in front of local media.

Woodside chief executive Don Voelte has previously said an East Timor plant was the most expensive option and would cost $US5bn more than a floating LNG plant.

Mr Pereira yesterday said the Woodside report revealed that a pipeline to East Timor would cost $US400m less than a pipeline to Darwin.

"Independent studies commissioned by Timor-Leste indicate the cost savings with a pipeline to Timor-Leste are likely to be much higher," Mr Pereira said.

He did not deny Mr Voelte's comments that the report showed East Timor was the most expensive option.

source: The Australia

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