East Timor and Phillips Petroleum to resume gas project

Representatives of East Timor and Phillips Petroleum (91-12) Pty Ltd. have reached an understanding on a tax and fiscal package that would allow the gas phase of the project to proceed with maximized revenues to East Timor.

"This is a very important step for East Timor," Mari Alkatiri, Chief Minister of the Transitional Government of East Timor, said today. "Petroleum revenue from the Timor Sea, and from Bayu-Undan in particular, will go a long way towards alleviating poverty in East Timor and will open up other investment opportunities in the joint East Timor-Australia area of the Timor Sea."

Also welcoming the agreement, the Acting Special Representative for the United Nations Transitional Administration in East Timor (UNTAET), Dennis McNamara, said "it demonstrates to the international community that East Timor will soon be financially, as well as politically, independent."

According to UNTAET, the project is expected to provide East Timor with $2.5 to $3 billion over a 25-year period. It had been stalled since July, when Phillips Petroleum and its co-venturers announced their decision to defer investment in a subsea pipeline proposed to transport natural gas from the Bayu-Undan field in the Timor Sea to Darwin, Australia – largely over fiscal and taxation issues.