East Timor ‘Confident’ on Reaching Agreement With Australia Over Greater Sunrise

Timor-Leste Prime Minister Xanana Gusmao gestures as he leaves the Defense Ministry office in Jakarta on Feb. 10, 2014. Adek Berry/AFP/Getty Images

East Timorese Prime Minister Xanana Gusmao is confident that a deal to finalise an agreement with Australia over the Greater Sunrise gas and oil project will be reached by early 2024.

The Greater Sunrise field in the Timor Sea has been a source of contention between both countries as East Timor (or Timor-Leste) pushes for gas and oil in the Greater Sunrise fields to be redirected from Darwin to his country’s south coast.

In May, Mr. Gusmao said that he would push for the case if he won the election, adding that if built, the gas pipeline would amend Australia’s “bad behaviour” over the past two decades.

Speaking to Portuguese-language news agency Lusa, Mr. Gusmao, 77, said he believed that the long-stalled development was close to being finalised.

“I am optimistic about an agreement in 2024,” Mr. Gusmao said. “I am confident with this new Australian government.”

On Aug. 31, Australian Foreign Minister Penny Wong said the Greater Sunrise is an “extremely important project” for East Timor that has been stalled for years.

Ms. Wong said she told President Jose Ramos Horta that Australia needed to “unstick it.”

During a diplomatic visit to East Timor’s capital in July, Ms. Wong said the Albanese government recognised the Greater Sunrise project as “unfinished business,” and acknowledged the past negotiation disputes over the maritime boundary in the Greater Sunrise gas fields.

Past Maritime Boundary Dispute

In 2016, East Timor launched a conciliatory process against Australia over the maritime boundary dispute before the Permanent Court of Arbitration.

It was alleged that the Australian Secret Intelligence Service installed listening devices in East Timor’s cabinet room in 2004 to gain an advantage in the negotiations on the maritime boundaries. The Turnbull government attempted to block the conciliation process.

“The Australian government should not have formally challenged the competence of the conciliation commission when a broader, more understanding approach was needed that reflected the unique relationship we had with such a close neighbour,” Ms. Wong said.

“It was not in the spirit of our friendship, from our struggle together in World War II to our support for your young nation after independence.”

First discovered in 1974, the Greater Sunrise fields are located approximately 450 kilometres northwest of Darwin and 150 kilometres south of Timor-Leste. It is estimated to be worth around $70 billion (US$50 billion) holding around 226 million barrels of gas.

Mr. Ramos-Horta said that his government viewed the pipeline as part of the country’s national strategic goal and, in September 2022, used Beijing as a bargaining chip should Australia’s Woodside Energy continue its preference to direct gas to Darwin.

The East Timorese president has since backpedalled on this statement, saying that he will likely first seek funding from Indonesia and then look to South Korea and Japan, but has urged Australian PM Anthony Albanese to publicly support the development of a gas pipeline in the Timor Sea.

At the same time, Mr. Ramos-Horta argued that his country would be on a “financial cliff” if the Greater Sunrise project is not operating within the next 10 years.

Currently, both countries are in talks to finalise a production sharing contract with the Sunrise joint venture partners and are aiming for terms to be settled by November.

Woodside Changes Tone

Woodside Energy, which owns 33 percent of Greater Sunrise, previously said it would be uneconomical to build a gas pipeline to East Timor and that it should be built to Darwin. But in December 2022, chief executive Meg O’Neill appeared to change tune after saying that it was “appropriate to reopen the concept evaluation.”

In May, Ms. O’Neill said the company needed to “understand the numbers and trade-offs” between piping the gas to Darwin compared to East Timor.

“The economics are going to be challenging, so we’ll have to get pretty creative and see if there’s maybe some new technologies that help us break through that,” she said, reported The Australian.

“But the political will is there and as with many of these developments, that’s an essential ingredient, so I’m glad we have that ingredient.”

The total capital costs for the gas pipeline project are $11.8 billion in Darwin and $14.1 billion in Timor-Leste. A previous study showed a $10 billion cost difference, reported the Australian Financial Review (AFR).

Ms. O’Neill said the Greater Sunrise could face a number of challenges.

“It’s a reasonable size gas field, but not a gigantic gas field, and that’s probably one of the reasons why it’s been challenging to develop to this point in time,” Ms. O’Neill said.

Meanwhile, East Timor’s economy has been dependent on earnings from its oil and gas reserves, which are expected to be depleted in a decade.

According to the World Bank, East Timor has successfully rebuilt public infrastructure, reduced poverty, and quickly built from scratch a network of functional public institutions since its independence in 2002.

However, the World Bank notes that there is an “urgent need” for private sector-centred development to not be dependent on the oil sector.

The Albanese government has said it is officially neutral on the gas processing plant’s location but is eager for a deal to be finalised between East Timor’s Timor Gap and Woodside.

Victoria’s ex-premier Steve Bracks, Gusmao’s former advisor, is a key figure in negotiations with the Australian government’s special representative for Greater Sunrise.

Victoria Kelly-Clark and Reuters contributed to this report.