The governments of Timor-Leste and Australia on Aug. 30 ratified the Maritime Boundary treaty establishing permanent maritime boundaries as well as a framework to develop the Greater Sunrise gas fields.
Australia and Timor-Leste struck the maritime treaty in March 2018. The agreement was to end maritime border disputes over the jurisdiction of assets including those of the Greater Sunrise gas field, which is majority-owned by East Timor's state-owned oil company Timor GAP EP and operated by Woodside Petroleum Ltd.
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Under the pact signed Aug. 30, the two countries agreed to develop the Greater Sunrise fields and share revenue jointly.
The agreement has significant importance to Timor-Leste, which will count on the revenue from Greater Sunrise when the Bayu-Undan gas field is decommissioned, WoodMackenzie analyst Chris Meredith said.
Timor-Leste won exclusive jurisdiction of the Bayu-Undan gas field as well as the Buffalo field under the Aug. 30 agreement. Santos Ltd. joined with its Bayu-Undan joint venture partners and the Australian and Timor-Leste governments in agreeing to the Bayu-Undan natural gas project operating in Timor-Leste’s exclusive maritime jurisdiction.
But Timor-Leste will only reap the benefits for a limited time, as ConocoPhillips, which operates Bayu-Undan, said it expects to decommission the field between 2021 and 2023.
"Timor-Leste's economy is underpinned by a petroleum fund that will see no additional revenue once the Bayu-Undan field ceases in 2022," Meredith said. "As a result, [the] development of Greater Sunrise is top priority."
"The treaty will support Timor-Leste's economic development by providing new opportunities for income and commercial and industrial development," Australia's Department of Foreign Affairs and Trade said in a statement.
Depending on how the resource is developed, Timor-Leste will receive 70% to 80% of the revenue from Greater Sunrise, the government agency said.
"We recognize the significance of the resource to Timor-Leste's economic future and want to see it developed in a way that maximizes the benefits for the Timorese people," the government agency said.
Timor-Leste favors the development of an LNG plant onshore, but Meredith said Woodside has indicated it will not invest in an LNG plant onshore Timor-Leste.
"We expect Woodside will initially pursue a liquids-stripping project. Monetizing the large liquid resource upfront. On a later timeline, the gas resource will be produced via the onshore liquefaction plant," Meredith said.
The Sunrise and Buffalo projects must agree to public service commission terms, finalize the development concepts and complete engineering studies before either project can be sanctioned, Meredith said.

