Penny Wong warns against ‘unsustainable debt’ in East Timor

Foreign Minister Penny Wong has warned East Timor not to risk ‘unsustainable debt burdens’ in developing its Greater Sunrise gas resource.

‘We, Australia, seek to help make your country stronger’: Foreign Minister Penny Wong in Dili on Thursday. Picture: DFAT

Foreign Minister Penny Wong has warned East Timor not to risk “unsustainable debt burdens” in developing its Greater Sunrise gas resource, in a pointed reference to the country’s threat to seek Chinese help for the project.

Senator Wong said after talks in Dili with East Timorese President Jose Ramos Horta that as a sovereign nation and majority shareholder in the project, “you (East Timor) make your own ­decisions”.

She said Australia’s development assistance and loans “come in the spirit of wanting your ­country to be more resilient. And we know economic resilience can be affected, can be constrained, by unsustainable debt burdens, or by lenders who have different ­objectives. We, Australia, seek to help make your country stronger. You may not always like everything we say and do but that is our motivation.”

Energy giant Woodside had hoped Senator Wong’s visit to East Timor would lead to a breakthrough in negoti­ations on development of the 5.1 trillion cubic feet gas and condensate field, worth an estimated $71bn.

The East Timorese government, which owns 56.56 per cent of the gas, wants it piped to a yet -to-be-built processing plant on the country’s south coast, but Woodside, the project operator and 33.44 per cent shareholder of the resource, says the plan is un­economical and the gas should be piped to an existing energy hub in Darwin.

Senator Wong said the project was “stuck”, and “I’ve said to the President and to others, we need to unstick it”.

Anthony Albanese will become personally involved in the negotiations next week when he hosts Mr Ramos-Horta at The Lodge in Canberra.

The East Timorese President said recently he would “absolutely” look to Chinese investment to achieve the country’s “national strategic goal” of processing the gas on the country’s south coast.

“Timor-Leste would favourably consider partnership with Chinese investors if other development partners refuse to invest in bringing gas via pipeline to Timor-Leste,” he told Guardian Australia.

East Timor’s $26bn sovereign wealth fund is on track to be exhausted by the end of the ­decade if it cannot develop the ­resource.

“We are all very aware of the fiscal and economic circumstances that are approaching,” Senator Wong said, adding that Greater Sunrise was an “extremely important project for Timor Leste”.

The Greater Sunrise project has long been a source of tension between the countries after it was revealed Australian spies bugged the East Timorese prime minister’s office during the 2004 negotiations over access to it.

Australian and East Timor signed a new deal in 2018 that entitled the developing country to 70 per cent of royalties revenue from the Greater Sunrise resource, or 80 per cent if the gas was processed in Darwin.

East Timor wants to develop a processing plant, new ports and highways along its Tasi Mane south coast, seeing the gas resource as its ticket to developing a homegrown national industry.

Darwin has existing LNG processing plants, an operating port and a skilled workforce to operate them, making the cost of processing the gas there significantly cheaper.