Woodside Petroleum Ltd's
(ASX:WPL) led Sunrise joint venture has been dealt a blow, with The Australian reporting that East Timor has threatened to cancel its historic treaty with Australia, unless Woodside agrees to local processing.
The Greater Sunrise liquefied natural gas development lies in the Timor Sea north of Australia.
According to the paper Woodside's $14 billion development proposal for Sunrise is already at a standstill, with East Timor rejecting a floating LNG processing plant because it wants the plant to be built in East Timor.
The latest threat has upped the ante, with East Timor warning it will exit the treaty unless the dispute over the floating plant is resolved.
Meanwhile, Resources Minister Martin Ferguson has told Reuters that the Australian government will not intervene, explaining that these matters get resolved over time.
Woodside holds a 33.4 per cent interest in the field, with the remaining stakes held by ConocoPhillips, Shell and Osaka Gas.
In the 2010 financial year, Woodside reported a net profit of $1.5 billion.
