According to abc.net.au, Timor-Leste has committed to moving forward with its disputed scheme to construct a pipeline from the Greater Sunrise gas fields to its southern shore following the departure of Australian energy giant Woodside Energy from the initiative.
Woodside Energy Sells Stake to Timor Gap
Woodside Energy revealed it reached an agreement to transfer its 33 per cent interest in Greater Sunrise to the state-run energy firm Timor Gap for a sum reaching $285 million. The transaction hands full control of the project to the South-East Asian nation after years of negotiations. The economic future of Timor-Leste has been pinned entirely on successfully constructing the pipeline and establishing a gas processing facility in the southern region of the country.
Woodside CEO Liz Westcott said in a statement that Greater Sunrise had been an important part of the company’s portfolio for many years. She noted that Woodside wanted to simplify its portfolio and focus on less complex and uncertain gas developments, though the company recognizes the project’s potential to deliver long-term economic and energy security benefits for Timor-Leste and the region.
Having no prior involvement in major gas developments, the state-backed enterprise Timor Gap was originally positioned to finance the endeavor while Woodside served as the operator. Timor Gap CEO Rui Soares struck a bullish tone following the purchase agreement, stating that the nation is now in a stronger position than ever to expedite development and transform the southern coast into an industrial and energy hub.
Chinese bidders could replace exiting energy operators
The Greater Sunrise project has a history spanning more than two decades, marked by a protracted battle over a maritime border between Australia and Timor-Leste that was resolved in 2018. Because progress on the development has stalled, Timor-Leste has spent a considerable period threatening to bring in Chinese firms as a tactic to pressure political decision-makers in Canberra.
EnergyQuest head and former chairman of Santos Rick Wilkinson told abc.net.au that the exit of Woodside opens the door for Chinese bidders seeking both gas and geopolitical influence. Wilkinson noted that Chinese state-owned firms like Sinopec and CNOOC already hold major stakes in two of Queensland’s three LNG projects, making a Chinese step forward plausible.
Beyond China, Wilkinson suggested the Timorese government could look to other producers such as Malaysia, through its oil and gas arm PETRONAS, or Indonesia, which he noted was starting to run short of its own gas supplies. A spokesperson for the Department of Foreign Affairs Trade stated that Woodside made a commercial decision, adding that the Australian Government remains committed to working with Timor-Leste and commercial partners under their Maritime Boundary Treaty.
Analysts question commercial viability of onshore plan
Analysts have questioned the commercial viability of the plan. Earlier this year, oil and gas analyst Saul Kavonic described the onshore plan as driven by resource nationalism and the politics and personalities of very influential people in Timor, warning that going it alone without a proven operator would be exceptionally risky for the national economy.
In anticipation of the project, the Timor-Leste government spent $670 million building a major freeway and international airport on the south coast. The highway opened in 2017 but is now riddled with potholes and sinkholes, while the international airport is barely used.
Wilkinson observed that the combined Sunrise gas fields held about five trillion cubic feet of gas, which he said was not huge by global standards. With Woodside pivoting away from Australia and towards the US, Wilkinson noted that Timor-Leste better have a backup as it assumes full ownership of the project.
Answers about the Greater Sunrise gas project
How much did Timor Gap pay for Woodside Energy’s stake?
Timor Gap agreed to pay up to $285 million to acquire Woodside Energy’s 33 per cent stake in the Greater Sunrise gas project.
What role does the Australian government maintain in Greater Sunrise?
The Department of Foreign Affairs Trade stated that the Australian Government remains committed to working with Timor-Leste and commercial partners to develop the project in accordance with their Maritime Boundary Treaty.
What infrastructure did Timor-Leste build in anticipation of the gas pipeline?
The government spent $670 million constructing a major freeway and an international airport on the south coast; the highway opened in 2017.
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