East Timor has agreed to buy Woodside Energy's stake in the Greater Sunrise gas project for up to $200 million, paving the way to speed up development of the fields that could be essential to Asia's smallest economy.
Australia's Woodside, which long opposed East Timor's plan for developing the project, said on Tuesday it would sell its 33 per cent operating stake to state-owned Timor Gap, including titles to the Greater Sunrise fields, making Timor Gap the 100 per cent owner.
Woodside's exit clears the way for Timor to pursue its ambition to produce liquefied natural gas for export, crucial for a country dependent on a petroleum fund that as of June held $18.9 billion, built on revenue from a now depleted gas field.
“We are now in a stronger position than ever to expedite the development of Greater Sunrise and advance the selection of the Timor LNG development concept, bringing us closer to realising our nation’s long-standing aspiration of developing Greater Sunrise on Timor-Leste’s southern coast,” Timor Gap CEO Rui Soares said in a statement.
The two fields that make up Greater Sunrise, discovered in 1974, are estimated to hold 5.1 trillion cubic feet of gas and 226 million barrels of condensate, a light crude oil typically found with gas.
The Greater Sunrise project was long stalled by a dispute between Australia and East Timor over the maritime border between the two countries and share of revenue from the project, which was resolved in 2018.
Since then, development has been held up as Woodside and the Timorese disagreed over whether the gas from the deepwater fields should be piped to an LNG plant in Darwin, in northern Australia, or to a new project in East Timor.
“We certainly know Sunrise has the potential to deliver great value to Timor-Leste in the region. But it is a complex project, particularly a project of this scale, and it requires the appropriate development pathway,” Woodside CEO Liz Westcott told Reuters last week.
Last November, the two parties announced a joint concept study for a five-million-tonne-a-year development. No cost estimate has been released.
A study leaked to the Australian Financial Review in 2022 estimated Greater Sunrise would cost $14.1 billion to develop with an LNG plant in East Timor.
In September, East Timor's petroleum minister said the earliest possible start of production from the project had been pushed back by two years to 2034.
To help fund the multibillion-dollar project, East Timor's petroleum minister Francisco da Costa Monteiro told Reuters last month that Timor Gap may farm down its stake provided any new partner was, “buying into the strategic vision that Timor has”.
He said given the current climate the planned five-million-tonne project could have a material impact on global LNG supplies as buyers look to diversify supply sources.
East Timorese President Jose Ramos-Horta has previously said Chinese firms expressed interest in Greater Sunrise, an issue that could worry the Australian government.
It would, "put Australia in quite a difficult situation,” said Bec Strating, director of the La Trobe Centre for Global Security at La Trobe University.
Completion of the transaction with Timor Gap is targeted for the first half of 2027, Woodside said. Most of the $200 million that Timor Gap agreed to pay is only due after it sells its first LNG cargo.
In early September, Timor Gap also agreed to acquire Osaka Gas' 10 per cent interest in the project.
It bought out stakes owned by ConocoPhillips and Shell for a total of $650 million in 2018.
(Reporting by Helen Clark and Shivangi Lahiri in Bengaluru; Editing by Sherry Jacob-Phillips and Sonali Paul)