Shell Australia announced on 21 Novemebr 2018 that it had reached an agreement to sell its 26.56% interest in the Greater Sunrise asset to the East Timor Government.Â  Shell becomes the second company to sell its interest in the project to the government, after ConocoPhillips reached a similar agreement in October 2018.  The sale and purchase agreement entered into by Shell and the East Timor Government, values the interest at USD 300 million (AUD 414 million).Â  Shell reported that the sale is in line with its global strategy, which is seeing it become a âsimpler and more resilient companyâ.  The sale and purchase agreement is conditional on a number of conditions, including regulatory approvals, joint venture pre-emption rights and funding approvals.  Upon completion of the deal, Shell will assign its 26.56% interest in permits JPDA 03-19, JPDA 03-20, NT/RL2 and NT/RL4 to the East Timor Government.Â  The JPDA contracts are, at this stage, within the previous-Joint Petroleum Development Area (JPDA) waters.Â  These will be renegotiated as East Timor PSCs, after the new maritime boundary was outlined in March 2018. These are expected in late 2018/early 2019.  The permits contain the Sunrise and Troubadour discoveries, that make up the Greater Sunrise assets.Â  The discoveries were made in 1975 and 1974 respectively and contain over 5 Tcf gas and 225 MMb condensate.  Shellâs sale comes after ConocoPhillips reached an agreement to sell its 30% interest in the assets to the East Timor Government, though this also remains subject to similar conditions to the Shell sale.Â  Both companies outlined that they differed in opinion with the East Timor Government over how the Greater Sunrise fields should be developed. Shell reported that it â[understood] the priorities of the Timor-Leste Governmentâ.   The development scenario for the fields has been long debated, with the Greater Sunrise joint venture (JV) preferring a Floating LNG (FLNG) option, over the East Timor Governmentâs suggestion to pipe the hydrocarbons back to an onshore plant in East Timor.Â  The JV have indicated this would be more costly, but also difficult as a development due to the bathymetry between the discoveries and East Timor. Both deals will have significance, as the East Timor Government has outlined that its preference remains, and with greater interest in the project it will have additional input into the development decisions.  Upon announcement of the initial transaction, the East Timor Government reported that it would proceed with further discussions with the JV to evaluate the future development.Â  Woodside, operator of the assets, has indicated that the project falls under its âHorizon IIIâ planned developments, which are scheduled for post-2027. Â   The Great Sunrise fields have been under discussion for development for some time, with Woodside initially planning to make a decision in 2009.Â  However a number of issues, including differing opinions in the development scenario, disputes around the maritime boundary and drop in oil price have pushed the development back a number of times.Â  Woodside has had several discussions with the East Timor government over the development, looking to come to an agreement. However the maritime boundary dispute put this on hold with Woodside reporting that it would wait for a resolution. Â   A new maritime boundary was agreed and the initial documents signed in March 2018.Â  The boundary is expected to be finalized and put in place in late 2018/early 2019.Â  The new maritime arrangement has included a âSpecial Regimeâ for Sunrise, which will see East Timor get at least 70% of the government revenues from the development, with the split to be 70:30 (in favour of East Timor) if the development sees a pipeline to East Timor, and split 80:20 if a pipeline to Australia is utilised.Â  It is not known if this will alter if the government has a stake in the project.  Participants in the Greater Sunrise joint venture are: Woodside Petroleum Ltd (33.44% + Operator), OG ZOKA Ltd, a wholly owned subsidiary of Osaka Gas Co Ltd (10%) and Shell Australia Ltd (26.56%) and ConocoPhillips (30%) â both selling their respective shares to the East Timor Government.
Australia, NT/RL2