The Foreign Minister has delivered a careful rebuke to Timor Leste's President José Ramos-Horta, who has been demanding the federal government intervene to help his country resolve a lengthy stand-off with energy giant Woodside over a contentious gas project.
Key points:
- The Woodside project has stalled over a disagreement about where the gas will be processed
- Foreign Minister Penny Wong says the problem must be solved respectfully, not through the media
- Some analysts doubt Dili's plan to build the project is viable
Mr Ramos-Horta has used a series of media interviews to warn that his country may turn to a Chinese company to fund the project if the Australian government does not "intervene" and lean on Woodside to back Timor Leste's plan to pipe gas from the Greater Sunrise fields to its south coast, where it wants to build a processing plant.
Penny Wong met late yesterday in Dili with Mr Ramos-Horta, along with other senior leaders, on her first trip as Foreign Minister to Timor Leste.
Timor remains heavily dependent on oil and gas revenue, and its financial reserves are due to run out by the end of the decade as existing fields run dry.
This morning Senator Wong told a joint press conference with Timor Leste's Foreign Minister, Adaljiza Magno, that Australia was "very seized" of the country's fiscal circumstances and the importance of Greater Sunrise to its government.
But she also emphasised that the Australian government did not have a direct stake in the project, and suggested Mr Ramos-Horta's public warnings about turning to a Chinese company had been counter-productive.
"It is important to recognise the joint venture partners need to come to an agreement for the project to proceed and … as yet that hasn't happened," she said.
"What I have said is that this [project] has been stuck for many years. I've said to the President and many others we need to unstick it. We need to see how a way through can be found."
"What I would say is that is best done respectfully and directly, not through the media."
The project has remain frozen in part because Woodside, which is the project's operator, has been pushing to pipe the gas south to Darwin for processing, rather than north.
Some analysts — as well as civil society groups in Timor Leste — are sceptical that Dili's plan to build the project is viable, casting doubt on the independence of reports which extol its financial benefits and viability. They also argue it could have damaging environmental and social consequences.
Charles Scheiner from Timor think tank La'o Hamutuk said the government's fixation with Greater Sunrise and building an LNG plant might distract it from the more crucial task of building an economic base which does not rely on oil and gas revenue.
"We don't know if this is a good project for the country or not," he told the ABC.
"We do know economic diversification is essential.
"Even if Sunrise goes ahead, it's only for a decade or two. It might carry the country for another 10 years, but then they'll need to diversify the economy, so why wait?
"It's not clear if any Chinese companies have expressed a clear interest in funding the project. Timor Leste's government has said there are several foreign companies are circling and keen to invest."
But Mr Scheiner said Timor Leste's government had not shown any hard evidence of commercial interest in the project.
"Most investors looking to make a profit are not interested in this project," he said.
"It's been out there for a few years already and nobody has come forward and said they want to invest.
"If China wants to invest in a project that's maybe not profitable I don't think Timor will turn them down, but a lot of the current talk is probably just a way to get Australia's attention, and it seems to be working."
Michael Leach, a professor in politics and international relations at Swinburne University of Technology, said even if Timor Leste found a Chinese company willing to fund the project and pipe gas north from Greater Sunrise, it would still need to secure an agreement from Australia.
"Australia does have to approve the development concept under the maritime boundary treaty signed in 2018," he said.
"Now, that doesn't mean Timor Leste can't get its way [if it finds an investor], but there will have to be negotiations over that."
"At this point there is no evidence of actual Chinese interest but what is important to note is that smaller states like Timor Leste have new bargaining power, new leverage in relation to countries like Australia because of the Chinese presence in the region."
Senator Wong would not say if Mr Ramos-Horta also raised the prospect of Chinese investment in the project when they met yesterday, but seemed to issue a veiled warning about the risks that might entail.
"Australia's assistance, our loans, our debt, they come in the spirit of wanting your country to be more resilient," she said.
"We know that economic resilience can be constrained by unsustainable debt burdens or lenders who have different objectives."