Saturday December 16, 2006

East Timor establishes oil and gas joint venture with Kuwait

DILI, East Timor (AP): East Timor has established a joint venture with Kuwait to distribute gas and oil and build fuel storage facilities across the tiny country.

The agreement will create the East Timor Trading Company (ETTC) to be 100-percent Kuwaiti owned, said a statement released by the office of Prime Minister Jose Ramos-Horta.

Under a shareholders agreement, profit from oil and gas sales will be split 70-30 between ETTC and the government of East Timor respectively.

No other financial details of the agreement, signed Wednesday but announced Saturday, were disclosed.

Offshore oil and gas reserves are seen as key to the financial future of the impoverished nation of less than a million people, which broke violently from Indonesia in 1999 after around two decades of brutal occupation.

At least 37 people were killed and 155,000 fled their homes in the capital, Dili, amid violence earlier this year that toppled a government in a sign of continued political instability seven years after independence.

"This agreement, once materialized, will be a major breakthrough for economic development in East Timor,'' Prime Minister Jose Ramos-Horta was quoted in the statement as saying. "Lower diesel and gas prices and improved distribution are expected.''

A distribution network with fuel storage facilities will be set up under the Timor Fuel Trading Company, it said, a subsidiary that will be 51 percent owned by the state of East Timor.

The structure enables development of the former Portuguese colony's run down energy infrastructure, but East Timor "will not contribute with any equity,'' the statement said. "There will be no financial implications or liability for East Timor.''

Once the joint venture is set up, it will take over government-held shares. The agreement entitles ETTC to manage the company for a decade.