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Sunrise appeal slowly dawning on Woodside

Woodside Energy (ASX:WDS) has softened its opposition to the Greater Sunrise LNG Project with the announcement yesterday of a dual path viability study to see if gas from the project can be delivered to Timor-Leste as efficiently as it could be to Australia.

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Woodside’s surprise announcement and apparent softening of its opposition to involving Timor-Leste as an option is a significant change for the project, Timor and its relations with Australia which have become strained over the project.

In December, chief executive Meg O’Neill said the company would reassess its view that piping gas from the Greater Sunrise field to the undeveloped south coast of East Timor was not viable.

That was a surprise because Woodside and its management and board have been of that opinion for a decade, but suddenly it appeared to change in December.

Some energy industry figures claimed the Woodside CEO had made a mistake because some parts of the Timor government might have been changing their view on sharing facilities with Australia.

That seems to have been a bit of pie in the sky thinking because the story had gone quiet after Ms O’Neill’s comments over the summer holidays.

The Sunrise development, located approximately 450 km north-west of Darwin and 150 km south of Timor-Leste, comprises the Sunrise and Troubadour gas and condensate fields. The fields contain an estimated contingent resource (2C) 5.3 trillion cubic feet of dry gas and 226 million barrels of condensate (100%).

About 70% of Greater Sunrise lies in East Timor’s seabed following a 2018 maritime boundary deal with Australia.

Now Woodside and the Sunrise group has moved to turn that change of heart into figures to see what the financial position is.

In a statement from Woodside on Monday it said “The Sunrise Joint Venture (SJV), comprising TIMOR GAP (56.56%), Operator Woodside Energy (33.44%), and Osaka Gas Australia (10.00%), hereby jointly affirms its commitment to undertake a concept select program for the development of the Greater Sunrise fields.

“The SJV will consider all of the key issues for delivering the gas, for processing and LNG sales, to Timor-Leste compared to delivering the gas to Australia.

“The studies will incorporate and update previous work by utilising the latest technologies and cost estimates while also considering the socio-economic, capacity building, safety, environmental, strategic and security benefits of the various options. The studies will include evaluation of which option provides the most meaningful benefit for the people of Timor-Leste.

“The SJV is aiming to complete the concept select program expeditiously given the benefits that could flow from developing the Sunrise fields.”

TIMOR GAP President and CEO Antonio de Sousa said he was pleased that TIMOR GAP’s efforts have substantially contributed towards realising the long-awaited goal of developing Greater Sunrise.

“This path forward is a significant commitment to our stakeholders, to the aspirations of those who made sacrifices to achieve independence for the Democratic Republic of Timor-Leste, and to the future of our people and Timor-Leste. It offers a clearer path to prosperity, equality, peace, stability, and sustainability for current and future generations,” he said.

Ms O’Neill said the development of new technologies and growing demand for safe and reliable LNG meant it was the right time to bring forward the concept select program.

“It is important we continue to look at ways to develop the Greater Sunrise fields using the latest technologies by evaluating, for example, modular LNG, that did not exist in the past.

“Against a backdrop of global geopolitical instability and constrained energy supply chains, there is an opportunity for the Sunrise Joint Venture to significantly advance this regionally important project,” she said.

Osaka Gas Australia Managing Director Yo Otsuka said in the statement it was important to assess and compare the development concept from both technical and commercial points of view to select the best option for the success of the Sunrise project.

Woodside said that in parallel to the concept select program, the SJV is progressing the negotiation of the new Production Sharing Contract, Petroleum Mining Code and associated agreements with the Timor-Leste and Australian Governments, which upon finalisation will provide the fiscal and regulatory certainty required for a development to proceed.

Unremarked upon in yesterday’s statements was suggestions that Timor was using rumoured Chinese interest as a stalking horse on the issue to get Australia and Woodside to this first step.

Woodside investors liked the news and sent the shares up 1.2% to $36.05. That was despite another fall in the price of oil on Friday on global markets.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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