The Attorney-General dropped the case against Bernard Collaery on July 7. Dreyfus’ announcement has greatly improved our relationship with Timor Leste and opened the door for smoother negotiations between Australian oil and gas companies and the Timorese government. That relationship is now oiling the wheels for further explorations in the Timor Sea but the wheels are turning slowly. Few investors are looking to oil and gas. Few buyers are planning long term hydrocarbon contracts.
The Australian government’s 2004 spying on the Timor Leste negotiators and Bernard Collaery’s eight-year battle could all be for nought. The market for oil and gas in the mid and long term is declining.
Timor-Leste has made about $18 billion from Bayu-Undan field, the only sea license that has ever produced abundant oil and gas from the Timor Sea. Bayu-Undan will run out next year. All plans to expand production there and elsewhere are uncertain.
The Timorese government has control over the Greater Sunrise fields through the National Petroleum and Minerals Authority. Woodside owns 34% of Greater Sunrise, the joint project with Timor Gap, Timor Leste’s National Oil Company. Some of the other companies keeping an eye on the prospects are Australia’s Santos with Italian company Eni, Carnavon Energy with Advance Energy, and Esperanca Timor Oan.
According to some, the value of the Timor Sea oil and gas is estimated to be AU$58 billion. Others believe the value is much lower, and dropping. As Woodside CEO Meg O’Neill has said ‘We’ve got a lot of hard work ahead of us.’ Santos and Eni are considering the expensive task of building a carbon capture and storage scheme in Australian controlled seas close to their Timor controlled block of water. The results from CCS other places indicate it is not worth the effort.
Getting more oil and gas out of the Timor Sea is risky. The future price is uncertain, the costs are enormous and the time frame for getting out the product is long, perhaps five years according to some. The depleted Bayu Undan field is in shallow waters from where the natural gas pipeline connects to the liquefied natural gas plant in Darwin harbour. From there the fuel is transported to Japan under long-term sales contracts.
Beyond Bayu Undan is the Timor Trough where deep waters present expensive and dangerous technical challenges. It is reported that the Carnavon Energy – Advance Energy joint venture did a test well in deep waters that did not produce the results anticipated.
And, there are those tectonic plates that no one has control over. Timor is in the middle of the ring of fire. That’s quite a risk for the insurance assessors to consider.
Who will want to buy oil and gas from the Timor Sea whenever and if the product comes to the market in five or ten years? Who will want to invest in oil and gas now that the transition to renewals is underway? Australia’s decades of destructive disruptive behaviour were all for nothing.