Timor-Leste (East Timor) President Fransisco Guterres has given his approval to a decree which allows the country’s petroleum fund to be used for buying out the stakes of Royal Dutch Shell and ConocoPhillips for $650m in the Greater Sunrise project offshore Australia.
The Greater Sunrise project calls for the development of the Greater Sunrise gas fields located in Australian territorial waters, some 150km south east of East Timor and 450km northwest of Darwin in Australia’s Northern Territory.
Both Shell and ConocoPhillips had signed agreements with the East Timor government in the past to divest their respective stakes in the offshore gas project.
Last month, the East Timor President vetoed the proposal of the government buying out the stakes claiming that it could result in the petroleum fund to be misused while calling for proposal to be relooked into. However, the veto was overturned with the proposal getting overwhelming backing from the parliament, reported Reuters.
The decree approved by the President removes the cap of 20% on state participation in oil and gas projects.
As per East Timor law, the President has the authority to veto a bill once, but should ratify it if the bill secures a parliamentary vote of approval.
In November 2018, Shell agreed to exit from the Greater Sunrise project by divesting its stake of 26.56% to the East Timor government for $300m. The deal signed by the Maritime Southeast Asian country covers Shell’s licenses NT/RL2 and NT/RL4 in Australia waters in addition to the PSC 03-19 and PSC 03-20 licenses contained in East Timor’s waters and associated governance agreements.
The closing of the deal was subject to funding approval from the East Timor Council of Ministers and National Parliament, along with regulatory and other approvals.
In October 2018, ConocoPhillips agreed to sell its 30% stake in the Greater Sunrise project to the East Timor government for about $350m.
The closing of the two deals with Shell and ConocoPhillips would give the East Timor government a majority stake in the offshore gas project. The other stakeholders in the Greater Sunrise project are Woodside, the operator, with a 33.4% stake and Osaka Gas with 10%.
The deals are expected to help the East Timor government and joint venture partners to advance the development of the Greater Sunrise fields, which comprise the Sunrise and Troubadour gas and condensate fields.