(Adds CEO, Timor expert comments)
By Aaron Sheldrick
TOKYO, Nov 6 (Reuters) - Australia's Woodside Petroleum is in talks with East Timor on building an onshore gasplant, potentially removing one of the major barriers todeveloping gas fields that could provide billions of dollars toone of the world's poorest countries.
Another major obstacle is a dispute between East Timor andits wealthy neighbour Australia on sharing revenue from theGreater Sunrise fields, which lie between the two countries.Both nations have said they are working to resolve thedecades-long row but it's not clear how long they will take.
Woodside Chief Executive Peter Coleman said partners on theGreater Sunrise project, which remains undeveloped 40 yearsafter the gas fields were discovered, were talking to the EastTimor government and the discussions included the possibility ofbuilding an onshore liquefied natural gas plant in East Timor.
His comment, in an interview with Reuters, was the firstpublic confirmation that the Greater Sunrise partners are notcompletely wedded to building a floating LNG plant, which haslong been their preferred option and which has been opposed bythe East Timor government.
"We have been in discussions with the Timorese arounddifferent development concepts, both floating and onshore,"Coleman told Reuters on the sidelines of an LNG conference.
East Timor's department of foreign affairs declined tocomment earlier this week on whether the country was in talkswith Woodside, and government officials could not immediately becontacted after Coleman's comments.
In 2010, Woodside executives said East Timorese officialsrefused to accept their plans for an offshore gas plant, andthrew their project documents back in their car.
East Timor has long pressed for onshore processing aspipeline construction, an onshore plant and port facilitieswould create jobs and jump-start a petrochemical industry in thetiny country of about 1.2 million people.
The Greater Sunrise fields, located 150 km (90 miles)southeast of East Timor, also known as Timor Leste, and 450 km(280 miles) northwest of Darwin, Australia, are estimated tohold more than 5 trillion cubic feet of gas and 226 millionbarrels of condensate.
That's roughly the same size as the Bayu Undan gas field inthe Timor Sea, which has been East Timor's main source ofrevenue since independence in 2002, pouring more than $17billion into its petroleum fund over the past decade.
ARBITRATION
Australia and East Timor recently agreed to adjourn aninternational arbitration over their dispute for at least sixmonths to try to resolve their differences directly. The disputestems from East Timor's allegations that Australia usedunderhand tactics, including bugging government offices in thecapital Dili, during the treaty negotiations.
Political observers say six months is an ambitious timeframe for sorting out issues that have brewed for years.
"I'd be very, very surprised if the two countries couldresolve their dispute by April," said Damien Kingsbury, aprofessor at Deakin University in Melbourne who has written fourbooks on East Timor.
The Greater Sunrise partners have long said they want to seethe dispute between the two countries resolved before they signoff on developing the project, which analysts say could cost $13billion with a floating LNG plant.
Woodside has previously estimated that an onshore plant inEast Timor would cost as much as $5 billion more than a floatingplant, as it would involve building pipelines across the TimorSea trench, seen as technically challenging and expensive.
East Timor last year offered to contribute $800 milliontowards the cost of a pipeline.
Woodside and its partners would first need to negotiate afiscal package with East Timor to govern an onshore plant beforethey launch engineering studies for building a pipeline andonshore plant, Coleman said.
"We have kicked that off. We have set a pretty aggressivetimeline to conclude that. We are hopeful in the first half ofnext year we will have matured that quite a lot," he said of thefiscal package.
Coleman said Greater Sunrise would not be developed ahead ofWoodside's other big growth project, Browse, which it hopes tosign off on with its partners in 2015.
"No, it won't come ahead of Browse, but we have always saidit should be an attractive development," he told Reuters.
Greater Sunrise is 33 percent owned by Woodside, theoperator, with ConocoPhillips owning 30 percent, RoyalDutch Shell 26.6 percent and Osaka Gas 10 percent. (Reporting by Aaron Sheldrick; Writing by Sonali Paul; Editingby Raju Gopalakrishnan)
