House of Representatives

Greater Sunrise Unitisation Agreement Implementation Bill 2004

Second Reading Speech

Macfarlane, Ian, MP (Groom, Minister for Industry, Tourism and Resources, LP, Government)

I move:

That this bill be now read a second time.

The purpose of the Greater Sunrise Unitisation Agreement Implementation Bill 2004 is to give effect to the agreement between Australia and the Democratic Republic of Timor-Leste relating to the unitisation of the Sunrise and Troubadour fields. The agreement was signed by Australia and East Timor in Dili on 6 March 2003.

The agreement has been considered by the Joint Standing Committee on Treaties. The committee supported the agreement and recommended that binding treaty action be taken.

The agreement provides a framework for the development and commercialisation of the petroleum resources in the Sunrise and Troubadour fields, which are collectively known as Greater Sunrise, as a single unit.

This resource straddles the border between the Joint Petroleum Development Area, which is the area of shared jurisdiction between Australia and East Timor established by the Timor Sea Treaty, and an area of Australian jurisdiction.

Greater Sunrise contains an estimated 8.35 trillion cubic feet of natural gas and 295 million barrels of condensate. Current estimates are that 20.1 per cent of these resources lie in the joint petroleum development area and 79.9 per cent in Australian jurisdiction.

Ratification of the agreement by Australia and East Timor is required to provide industry with the certainty needed to proceed to develop this major resource. Australia will meet its obligations through amendments to the Petroleum (Submerged Lands) Act 1967 and other legislation.

The bill puts into place the administrative arrangements for the unit development of the Greater Sunrise petroleum resource. In practice, this means that Australian regulators and regulators of the joint petroleum development area will be able to ensure, jointly, that administration of the Greater Sunrise petroleum operations is coordinated, and that recovery operations are conducted in accordance with good oilfield practice.

To the extent appropriate, the administrative arrangements will mirror those that apply elsewhere under Australian regulatory control. For example, for safety, occupational health and protection of the environment, a single regime will apply across both the portion of the resource that is within the joint petroleum development area and the portion within Australian jurisdiction.

Moreover, that regime, entailing the preparation of environmental management plans and safety cases, will be the same as for any other petroleum development in Australia's offshore area.

There are, however, some aspects of the agreed arrangements that will be specific to administration of the Greater Sunrise petroleum resource. For example, the process for approving the development plan and the unit operator will be Greater Sunrise specific. This reflects matters agreed between Australia and East Timor and has no application outside the Greater Sunrise resource.

To ensure consistency of administration of development of this resource, the arrangements that usually apply in the Northern Territory adjacent area will be modified to enable the responsible Commonwealth minister to exercise statutory powers, rather than the Commonwealth minister working in concert with the counterpart Northern Territory minister, or instead of the Northern Territory minister working alone.

This will be a very similar arrangement as that which applies to the Territory of Ashmore and Cartier Islands. This modification applies only in relation to the Greater Sunrise resource and will not affect administration of petroleum operations in the rest of the Northern Territory adjacent area.

In practice, the Australian government will work with the Northern Territory government on the day-to-day administration of the Greater Sunrise resource.

For the purposes of taxation, the part of petroleum production from Greater Sunrise attributed to the joint petroleum development area will be taxed in accordance with the arrangements under the Timor Sea Treaty whereby East Timor has title to 90 per cent of production and Australia to 10 per cent.

The part of production from Greater Sunrise attributed to Australia will be taxed in accordance with Australia's domestic taxation arrangements.

Development of the Greater Sunrise resource could provide revenue to Australia of around $A8.5 billion over the life of the project.

The agreement includes a mechanism for adjusting the initial petroleum production apportionment between the joint petroleum development area and Australia if new geological evidence indicates that a revision is needed.

The agreement also includes a clause which states that its contents are without prejudice to the maritime boundary claims of Australia and East Timor. Discussions with East Timor concerning these claims have commenced.

As an essential first step towards developing Greater Sunrise, industry is seeking overseas markets for liquefied natural gas (LNG) produced from the resource. In keeping with its commitments under the LNG action agenda, the government will continue to support industry efforts to win LNG export contracts.

At the same time, industry is examining development options for the resources, including bringing gas onshore to a liquefaction plant or the use of new floating liquefied natural gas technology.

Timely development of Greater Sunrise will deliver significant benefits to both Australia and East Timor. These benefits include investment, exports and employment as well as revenue. In addition, development of Greater Sunrise will stimulate increased investment in petroleum exploration and development in the Timor Sea which will be in the interests of Australia and particularly East Timor.

Just as Australia is honouring the agreement it reached with East Timor by putting in place the necessary legislation, I call on the government of East Timor to expedite its own treaty implementation process.

The enactment of this bill will provide the legislative framework under which Greater Sunrise can be developed and will therefore contribute significantly to investor certainty in the area.

It is clearly in the national interest of Australia, as well as East Timor, that this bill be approved as soon as possible. I commend the bill to the House and I present the explanatory memorandum to the bill.

Debate (on motion by Mr Fitzgibbon) adjourned.