WPL Woodside Petroleum Limited

   By Robb M. Stewart 
 

MELBOURNE, Australia--Royal Dutch Shell PLC (RDSA) has joined ConocoPhillips (COP) in exiting a stalled natural-gas project, agreeing to sell its stake in fields far off the northern coast of Australia to the government of East Timor for US$300 million.

The deal means the small nation will have majority control of the Greater Sunrise gas fields, allowing it to drive plans for the fuel to be piped back to its shores to a proposed plant that would chill it to liquefied natural gas.

Shell said late Wednesday it had agreed to sell its 26.6% stake in the fields, which were discovered in 1974 and hold an estimated gross resource of 5.13 trillion cubic feet of gas and 225.9 million barrels of condensate, a liquid often found in gas fields that is used as a fuel and in plastics.

In early October, Conoco struck a deal to sell its 30% interest to East Timor for US$350 million. Both transactions remain subject to receiving funding approval from the Timor-Leste Council of Ministers and National Parliament, as well as regulatory approvals and rights by the other partner to pre-empt a sale.

Woodside Petroleum Ltd. (WPL.AU) operates the Greater Sunrise project with a 33.4% stake. Osaka Gas Co. holds the remaining 10%.

Zoe Yujnovich, executive vice president of Shell's Australian arm, said that while the company had different views on the best development scenario for the Greater Sunrise project it respected East Timor's determination to develop the fields through an onshore LNG facility.

The Sunrise and Troubadour gas fields, collectively known as Greater Sunrise, are located about 90 miles southeast of East Timor and 280 northwest of Darwin in Australia's north. In March, Australia and East Timor settled a longstanding dispute on maritime boundaries that previously included almost 80% of the Greater Sunrise project in Australian waters and the rest in a joint-development area.

The alternative proposal considered by the two governments and the venture partners would see the gas tied into existing pipelines to the operating Darwin LNG plant in northern Australia.

A conciliation commission set up when Australia and East Timor began negotiating maritime boundaries in 2016 under the United Nations's Convention on the Law of the Sea, estimated that under prevailing market conditions plans for a plant in East Timor would struggle to meet the sort of return expected by an international oil company and would require a direct subsidy or another funding kicking in billions of dollars to ensure the project got uop.

East Timor's special representative, Xanana Gusmao, said the country appreciated Shell's willingness to sell its interests in the project. "Shell's attitude throughout the negotiations shows that it is ready to consider not only its commercial interests but also the interests of small nations," he said.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

November 21, 2018 17:05 ET (22:05 GMT)

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