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The True Value of a Timor Sea Gas Resource

Crude oil prices have climbed since 2002, and so government revenue from a Sunrise gas project is about four times higher than figures used by oil companies.
The full text of Geoff McKee's analysis can be read on-line using this web-link:
www.pcug.org.au/~wildwood/05mar26mckee.html

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The governments of Timor-Leste and Australia are in conflict over ownership of the Greater Sunrise gas fields. The following analysis shows that, because crude oil prices have climbed dramatically since 2002, the potential government revenue arising from a Sunrise gas project is about four times higher than the figures used by the oil companies and others.

Geoff’s conclusions are vital as they enable communities in East Timor, Australia and elsewhere to appraise the actual value of the Sunrise gas resource: the largest field in the dispute. Because Geoff clearly states his assumptions, these can be used by ordinary people to evaluate the fairness or otherwise of the Australian government’s offers to East Timor.

Geoff McKee is an expert engineer who has been analysing oil and gas development in the Timor Sea for many years. He currently lectures at the University of New South Wales in Sydney, Australia.

He is well known for his October 2002 submission to the Australian Parliamentary Joint Standing Committee on Treaties, which demonstrated the economic and practical feasibility of piping gas to East Timor for processing, enabling the new country to benefit from the jobs and infrastructure that would come with the "downstream" facility.

Dez Wildwood, Back Door Newsletter

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Excerpts from the Report:

How much is the Greater Sunrise really worth?:

A revised potential revenue estimate for a disputed gas resource in the Timor Sea

By G. A. McKee
Sydney, Australia

smokehaze (at) yahoo.com

www.petrol.unsw.edu.au/GeoffMcKee.htm

March 26, 2005

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"If the project goes ahead Australia and Timor Leste could expect more than $90 billion (US$68 billion) in export revenues and about $A52 billion (US$39 billion) government receipts (taxes and royalties) ... The value of the field to Timor Leste must be seen as the sum total of the upstream plus downstream benefits. The US$39 billion in government receipts is only half the story. Of comparible value are the downstream benefits arising from onshore infrastructure investment." Geoff McKee, Oil and Gas expert

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"Governments and oil companies are reluctant to discuss their assumptions, since this is seen as “sensitive? commercial information. As a result, ordinary people and activists in a supposedly democratic society find it very hard to get the information they need in order to make reasonably informed judgments. The government of Timor Leste currently has a large amount of very good information delivered to it by Woodside, giving costs and benefits relating to the construction of a pipeline to Timor from Sunrise and an export facility in that country. Supporters of East Timor need to know what is in these reports, in order to calibrate their efforts to help East Timor. But unfortunately it is difficult sometimes to find “transparency? in this business where oil revenue is involved. Governments often want to keep information to themselves (when it suits them) and prefer to have a band of less than well-informed supporters that they can more easily manipulate. The government of Timor Leste should put Woodside’s reports into the public domain, in the same way that the Northern Territory government allows the public to view its similar reports [2, 3], or in the same way that oil companies put their environmental impact statements into the public domain to satisfy the public’s “right to know?."
 
 


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