SYDNEY (AFP) - Australian oil giant Woodside Petroleum Ltd. warned that it will pull out of the 7.0 billion dollars (5.4 billion US) Greater Sunrise oil and gas project if the stand-off between East Timor and Australia continues.
Woodside is the lead developer in the project which lies in the Timor Sea between East Timor and Australia, the revenues from which will be the primary source of income for impoverished East Timor.
But the project is being held up by a maritime boundary and royalty dispute between the two governments.
Woodside chief executive Don Voelte said the company cannot invest more money into the project until the boundary dispute is resolved.
Voelte said Woodside has put a December deadline on a resolution, but the stand-off could take years to resolve.
The dispute over the maritime boundary is preventing the East Timor government from signing a revenue sharing deal known as the International Unitisation Agreement (IUA) for the field.
"If the project does stall we'll move our resources, our people, to other more vibrant projects and we hope to come back to Sunrise when the agreements are reached," he told the Nine Network's Business Sunday.
A deal between the nations was struck and passed through the Australian Parliament this year, but East Timor has yet to ratify it.
Voelte said if Woodside was forced to walk away it would be easier to pick up the project again if an agreement is forged in the near future.
"We know the size of Sunrise, we've appraised it, we know the technical capabilities of the reservoir, we know what it takes to operate it, we know the project development scheme, so it would be quickly picked up if there was some agreement reached," he said.
"But it's conditioned on the markets.
"We saw a certain market window, we had interested customers, and if the project stalls, we'll lose that window, those costumers will have to go to another project."
Under the IUA agreed but not ratified by Dili, 80 percent of Sunrise falls within Australian waters leaving East Timor access to just 20 percent.
A second revenue sharing deal allows East Timor to take 90 percent of government revenue from the so-called Joint Petroleum Development Area, which includes only 20 percent of Sunrise, whose fields are considered the most lucrative in the area.
East Timor regards the Timor Sea revenue as a lifeline that can end the nation's dependence on international aid.
11/21/2004 - 05:54 GMT - AFP