Impact of an Exclusive Economic Zone delimitation on East Timor s petroleum revenue EEZ TIMOR SEA PETROLEUM SEMINAR Dili, East Timor, March 23, 22 Presentation by Geoffrey McKee G A McKee & Associates Pty Ltd Oil & Gas Project Development Services Sydney Australia Impact of an Exclusive Economic Zone (EEZ) delimitation on East Timor s Petroleum Revenue Brief history / background 5 July 21 proposal versus EEZ delimitation - Sunrise - Laminaria / Corallina - Bayu-Undan Potential benefit to East Timor of an EEZ delimitation US$4 billion* * Additional revenue to East Timor, cumulative as-spent dollars of the day over life of all project scenarios 2 to 25 (assumes base oil price escalation of 2.5% in line with forecasted US inflation rate). The present (real, de-escalated) value of this future cash flow is approximately US$21 billion. Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 2
Zona nebe Timor Loro Sa e ho Australia diskute hela Tri-points A16 and A17 were never intended to be permanent points: refer Article 3 of 1972 seabed boundary agreement Minimum EEZ Entitlement Possible EEZ Entitlement A16 5 July 21 Australia / East Timor Joint Petroleum Development Area 9% East Timor / 1% Australia A17 Greater Sunrise Evans Shoal Laminaria-Corallina Bayu-Undan Fronteira Tasiokos nebe Indonesia ho Australia akorda iha 1972 Linha klaran Fronteira be dalan nian nebe akorda iha 1997 Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 3 Sunrise gas resource Condensate: 3 million barrels LNG: 177 million tonnes 2.5 billion barrels of oil equivalent (BOE) A16 A15 Indonesia Australia 1972 seabed boundary Possible EEZ Entitlement (1%) 5 July 21 JPDA Entitlement (9%)(2%) = 18% Minimum EEZ Entitlement (~8%) Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 4
Sunrise gas resource Condensate: 3 million barrels LNG: 177 million tonnes Energy 2.5 billion barrels of oil equivalent (BOE) 5-July-21 proposal Resources owned Possible resources lost 37 million BOE 168 million BOE Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 5 Sunrise gas resource - Floating LNG prospect Condensate: 3 million barrels LNG: 177 million tonnes Thousand BOE per day 2 15 1 5 Production 25 21 215 22 225 23 235 24 245 25 Gross sales revenue US$8 billion* Project cash flow US$ millions 3, 2, 1, * cumulative as-spent dollars of the day over the life of this project scenario. The present (real, de-escalated) value of this future revenue flow is US42 billion. -1, 25 21 215 22 225 23 235 24 245 25 Development Capital costs Combined product sales revenue Operating cost (incl. LNG transport) Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 6
Sunrise FLNG project scenario Government revenue split between East Timor and Australia based on 5 July 21 Arrangement (unratified) As spent dollars-of-the day East Timor US$ 8 billion* Australia US$ 28 billion* US$millions 1,2 8 4 21 22 23 24 25 FTP Profit Oil Company tax 1,2 8 4 21 22 23 24 25 Company tax Resource Rent Tax Total government take = $36 billion * The present (real, de-escalated) values of these future cash flows are US4.4 billion and US$15.6 billion respectively Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 7 Sunrise FLNG development scenario Indicative government revenue Cumulative dollars-of-the day over project life East Timor US$ 8 billion* East Timor US$ 44 billion* US$ billions 5 4 3 2 1 Australia US$ 28 billion 5 July 21 proposal Potential EEZ Australia Nil Potential additional revenue = $36 billion * The present (real, de-escalated) values of these future cash flows are US4.4 billion and US$22.3 billion respectively Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 8
Potential resources Laminaria / Corralina oil field 198 million BOE Minimum EEZ Entitlement A17 A18 1972 Australia / Indonesia seabed boundary July 21 JPDA Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 9 Laminaria / Corralina oil field Potential resources Production 198 million barrels Thousands of barrels per day 16 14 12 1 8 6 4 2 1994 1996 1998 2 22 24 26 28 21 212 Project cash flow Gross sales revenue US$4.1 billion* US$ millions Exploration & appraisal cost Operating cost * The present (real, de-escalated) value of this sales revenue is US$4. billion. 1,1 9 7 5 3 1-1 -3-5 1994 1996 1998 2 22 24 26 28 21 212 Drilling & facilities cost Gross product sales revenue Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 1
Laminaria / Corralina development Hypothetical East Timorese revenue if resources were inside East Timor s EEZ As spent dollars-of-the day East Timor PSC fiscal scheme at 1% jurisdiction US$ 2. billion* US$millions 4 35 3 25 2 15 1 5 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 East Timor FTP East Timor Profit Oil East Timor corporate tax * Present Value is US$ 1.9 billion. Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 11 Bayu-Undan gas condensate field LPG: 175 million barrels Condensate: 229 million barrels LNG: 66 million tonnes Energy 1.5 billion barrels of oil equivalent (BOE) Minimum EEZ Entitlement July 21 JPDA Current joint development proposal East Timor 9% / Australia 1% 1981 FPSL / 1997 EEZ / Median Line Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 12
Bayu-Undan gas condensate field LPG: 175 million barrels Condensate: 229 million barrels LNG: 66 million tonnes 5-July-21 proposal Energy 1.5 billion barrels of oil equivalent (BOE) Resources owned 9% Potential resources lost 1% 94 million BOE 15 million BOE Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 13 Bayu-Undan gas condensate field LPG: 175 million barrels Condensate: 229 million barrels Gas (LNG): 66 million tonnes Liquids project Production assumptions + offshore LNG prospect? 16 Thousands 12 of BOE per day 8 4 2 25 21 215 22 225 23 US$ millions Gross sales revenue US$9.5 billion* 1,5 1, 5-5 2 25 21 215 22 225 23 1,5 1, 16 12 8 4 2 25 21 215 22 225 23 5-5 Gross sales revenue US$28 billion* -1, 2 25 21 215 22 225 23 Capital cost Operating cost Gross product sales revenue Capital cost Operating cost Gross product sales revenue Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 14 * The present (real, de-escalated) values of these future cash flows are US$7.5 billion and US$2.1 billion respectively
Bayu-Undan gas condensate field Liquids project Revenue to East Timor US$4.1 billion Offshore LNG prospect? US$12.4 billion US$3.6 billion* With EEZ US$11.2 billion* With EEZ US$millions 7 6 5 4 3 2 1 1998 2 22 24 26 28 21 212 214 216 218 22 222 224 226 228 23 7 6 5 4 3 2 1 1998 2 22 24 26 28 21 212 214 216 218 22 222 224 226 228 23 9% share of FTP 9% share of Profit Oil East Timor corporate tax First Tranche Petroleum Profit Oil East Timor corporate tax * The present (real, de-escalated) values of these future cash flows are US2.8 billion and US$7.7 billion respectively Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 15 Bayu-Undan gas condensate field Liquids project Revenue to East Timor US$4.1 billion US$3.6 billion With EEZ Impact of base crude oil price US$ billions 8 7 6 5 4 3 2 US$22/barrel US$25/barrel US$3/barrel Current arrangement Potential EEZ Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 16
Spot Crude oil prices 1973-22 Arab oil embargo Gulf war Iranian revolution US$ per barrel 4 2 197 1975 198 1985 199 1995 2 25 Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 17 Summary East Timor s indicative petroleum resources Millions of barrels of oil equivalent 1,31 1,98 25 All 4 projects 2 15 1 5 Laminaria Corallina B-U liquids & offshore LNG Sunrise FLNG Potential additional entitlements through EEZ delimitation Resource entitlements based on 5 July 21 proposal Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 18
Summary East Timor s indicative petroleum revenue US$ billions Cumulative as-spent dollars of the day over life of projects 19.1 39.4 5 All 4 projects, 58.5 4 3 2 1 Laminaria Corallina B-U liquids & offshore LNG Sunrise FLNG Potential additional revenue through EEZ delimitation Revenue based 5 July 21 proposal Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 19 Summary East Timor s indicative petroleum revenue US$ billions Cumulative, de-escalated (real) 22 dollars 12.1 2.6 25 2 15 1 5 Laminaria B-U liquids Corallina & offshore LNG Sunrise FLNG All 4 projects, total 32.7 Potential additional revenue through EEZ delimitation Revenue based on existing arrangement Timor Sea Petroelum Seminar - Dili, East Timor, March 23, 22 2