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REUTERS
Perth: Uncertainty over the fiscal and tax regime applying to gas production in the Timor Gap between Indonesia and Australia may affect future projects in the jointly-managed region, an industry executive said.
A former executive director of the Timor Gap Joint Authority, Stuart Cave, said after a seminar on the Zone of Co-operation Agreement (ZOCA) that the agreement was mainly designed to handle questions of oil production.``The treaty is largely silent on gas,'' Cave said. ``Oil production is far simpler with producers taxed at the point of their tankers loading.''``Greater clarity on gas will be required so producers know who they are dealing with.''
The biggest potential project affected by the uncertainty is the Bayu-Undan gasfield which Phillips Petroleum Co proposes to develop as a liquefied natural gas (LNG) project with gas piped to a site near Darwin in Australia's northern territory. Bayu-Undan could produce 110,000 barrels per day of condensate and liquefied petroleum gas coming on stream inlate 2002 or 2003. The project also has reserves of 3.1 trillion cubic feet of gas.The only current production from ZOCA is the 33,000 barrels per day output from the Elang, Kakatua and Kakatua North oil fields, which began production on July 20 last year. Phillips has the largest stake in this project as well.Cave said detailed talks are underway between Australia and Indonesia about whether the gas is treated for tax purposes at the wellhead or landfall.But the talks have been slowed by the question of East Timor's future status.The one-day seminar, which was designed to deal with day-to-day operational issues in the Timor Gap, was closed to the media.
Cave said the question of possible East Timorese independence from Indonesia did not appear to effect ZOCA.
``The Australian government believes that should East Timor become independent then the principle of succeeding states will apply,'' he said.This principle involves a straight forward transfer of obligations under existing treaties. However, thatwill still leave unanswered the question of gas treatment which may become an issue between Australian and East Timor if it is not resolved soon with Indonesia.
UN police advisers have started arriving in the former Portuguese colony to help in the August 8 ballot to ascertain whether 400,000 voters want autonomy within Indonesia or independence.
The foreign ministers of Indonesia and Portugal signed landmark accords in New York earlier this month on the poll for East Timor, which Indonesia invaded in 1975 and annexed a year later in a move not recognised by the United Nations.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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