Woodside drops East Timor site for LNG project

PERTH, July 31 (Reuters) - Woodside Petroleum Ltd (WPL.AX), Australia's second-largest oil and gas producer, has ruled out building a liquefied natural gas (LNG) export plant in East Timor to process gas from its Greater Sunrise fields in the Timor Sea.

Woodside was now looking at either piping the gas to the Wickham Point LNG plant at Australia's northern city of Darwin, or commercialising the gas offshore using floating LNG technology, spokesman Roger Martin said on Thursday.

"We have an obligation to make sure the fields are developed to the best commercial advantage and we've informed the East Timorese regulators of our two development plans," Martin said.

East Timor, a nation of 800,000 regarded as Asia's poorest country, has been pushing to have the LNG export terminal built on its shores to boost its local economy.

But Woodside has said that building the LNG plant at East Timor would require constructing a 184 kilometre pipeline that would have to cross a 3 kilometre deep trench, which Woodside said was too risky and expensive.

The Greater Sunrise fields, which lie in the Timor Sea about 450 kilometres northwest of Darwin, straddle the boundary of the Joint Petroleum Development Area of the Timor Sea.

Development of the Greater Sunrise fields, discovered in the 1970s, was frozen in 2004 because of differences between Australia and East Timor about the revenue split from oil and gas reserves beneath the sea that divides them.

But the LNG project was revived after East Timor's parliament ratified a pact with Australia in February last year to evenly split royalties from Greater Sunrise, estimated to hold 8 trillion cubic feet (tcf) of gas and up to 300 million barrels of condensate.

The Darwin proposal, which would require a near 600 km pipeline, would see the expansion of the existing Wickham Point LNG plant at Darwin, which is operated by joint venture partner ConocoPhillips (COP.N).

Woodside, operator of the Sunrise LNG project with a 33.4 percent stake, said it plans to make a decision on the development plan of the field in the first half of next year and move towards a final investment decision later in the year.

Woodside has not given an estimated cost of the project.

Partners for the Sunrise LNG development includes ConocoPhillips, Royal Dutch Shell (RDSa.L) and Osaka Gas (9532.T), holding 30 percent, 26.56 percent and 10 percent interest respectively. (Reporting by Fayen Wong; Editing by Michael Urquhart)