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Timor-Leste Buys ConocoPhillips' Share of Greater Sunrise Fields

Greater Sunrise fields

By MarEx 2018-10-01 18:51:40

ConocoPhillips has agreed to sell to the government of Timor-Leste its 30 percent interest in the offshore gas Greater Sunrise fields for $350 million. The transaction is expected to close in the first quarter of 2019.                

The Sunrise and Troubadour gas and condensate fields, collectively known as Greater Sunrise, are located approximately 150 kilometers (90 miles) south east of Timor-Leste and 450 kilometers (280 miles) north west of Darwin, Australia, in waters up to 600 meters (2,000 feet) deep. 

In February this year, Timor-Leste and Australia agreed to settle their maritime border dispute, paving the way for the development of the field. Approximately 20 percent of the Greater Sunrise fields are situated in a Joint Development Petroleum Area, jointly administered by Timor-Leste and Australia, while 80 percent are in Australian waters.

Australia had sought a boundary aligned with its continental shelf, but East Timor argued the border should lie half way between it and Australia - placing much of the Greater Sunrise fields under its control. 

Greater Sunrise was discovered in 1974, and it is estimated that the fields contain 5.1 trillion cubic feet of LNG and 226 million barrels of condensate. Woodside Petroleum is operator in the project and has a 33.44 percent share. Development partners include Royal Dutch Shell (26.56 percent) and Osaka Gas (10 percent). In 2010, Woodside announced its preference for using a FLNG processing plant.

Under the agreement made between the two nations in the Permanent Court of Arbitration in The Hague, the share of revenue from the offshore gas field will differ depending on downstream benefits that arise from different development concepts. Timor-Leste has been pushing for an onshore gas processing plant rather than a floating plant. According to some media reports, the nation could receive up to 80 percent of the field's revenue, but may agree to less if gas is piped to a shoreside plant.

Wood Mackenzie’s analyst David Low says he believes the government's purchase of ConocoPhillips' share means that onshore LNG development, rather than an FLNG, is now likely. This would involve construction of a new liquefaction plant and associated infrastructure, a FPSO to process and handle the condensate and construction of a pipeline connecting the FPSO to shore.

“Timor-Leste authorities are determined to harness the economics benefits of an onshore development. The Timor-Leste government are also pursuing the development of Sunrise to replace declining revenues from the mature Bayu Undan field,” said Low. “We believe the key onshore project risk is the construction of a greenfield LNG project in a country that has historically lacked large-scale infrastructure projects. The next step is for the project to put forward a viable development plan that all the project participants would be willing and happy to commit too.”