Redevelopment of Carnarvon Petroleum-operated Buffalo oil field will now be undertaken in an area of exclusive Timor-Leste jurisdiction, following the signing of a new maritime boundary treaty between Australia and Timor-Leste.
Carnarvon is the operator of the WA-523-P block, which contains the Buffalo oil field, set in the Bonaparte Basin, on the North West Shelf.
Carnarvon in February revealed its intention to take the Buffalo project forward to drilling and development, following new data which further improved the imaging of the Buffalo oil reservoir.
The Australian and Timor-Leste Governments signed the treaty establishing their maritime boundaries in the Timor Sea. The treaty will enter into force when Australia and Timor-Leste have notified each other in writing that the requirements for entry into force have been fulfilled.
For Australia, this requires the treaty together with relevant and associated legislation to be presented to its parliament for approval. For Timor-Leste, this requires ratification of the treaty by the National Parliament, and subsequently the President of the Republic’s Order for the treaty to be published in the official gazette.
Carnarvon’s 100% owned WA-523-P permit is affected by the boundary, most notably the Buffalo oil field will now fall within Timor-Leste’s exclusive jurisdiction. A portion of WA-523-P will remain within Australia’s exclusive jurisdiction.
Carnarvon said on Wednesday that the treaty provides that security of title and legal rights currently held by Carnarvon will be preserved through conditions equivalent to those already in place under Australian domestic law. Special legislation will also be enacted by Timor-Leste to ensure the Buffalo oil field redevelopment will proceed under equivalent fiscal terms to those in place under Australian domestic law.
The company’s objective is to have the required production sharing contract (PSC) in place once the treaty is ratified by Australia and Timor-Leste. In addition to this, Carnarvon has been assured that it may proceed with operation and preparatory activities for redeveloping the field prior to the ratification of the treaty.
The discussions held so far with officials from Timor-Leste make it clear Carnarvon and Timor-Leste are equally agreed to achieve first oil as soon as possible. Carnarvon believes there to be a number of benefits in developing the field within the Timor-Leste framework and therefore, the near-term priorities are to enter into a PSC and finalise the preferred options for developing this valuable resource.
Carnarvon’s Managing Director, Adrian Cook said, “We wish to congratulate the Australian and Timor-Leste Governments for establishing certainty over the maritime boundaries in the Timor Sea and for respecting the rights and interests of affected companies such as Carnarvon.
“We have established a positive and constructive working relationship with representatives from the ANPM and Timor-Leste Government and look forward to building upon this as we work to redevelop the Buffalo oil field. Even at this early stage, we feel aligned in our endeavors to commence production from the Buffalo oil field safely, promptly and in a manner that delivers appropriate benefits to Carnarvon’s shareholders and the people of Timor-Leste.”
The Buffalo field was developed using four wells drilled from a small, unmanned wellhead platform installed in 25 meters water depth, tied back to an FPSO.
Production started in December 1999 at production rates up to approximately 50,000stb/d and terminated in November 2004 after the production of 20.5MMstb of highly-undersaturated, light oil (53°API) from the Jurassic-age Elang Formation.
All existing facilities and wells were decommissioned and removed prior to Carnarvon being awarded the block. Carnarvon secured the exploration permit in 2016.
At this time, scoping studies show that the oil field redevelopment is clearly economic on a range of field development options. As a field redevelopment, the project is considered low risk which gives Carnarvon the confidence to advance the project.