Subject: East Timor sets petroleum hub land aside

also East Timor is set for an oil facelift, Fretilin bid to unseat coalition

Upstream, 18 September 2009

East Timor sets hub land aside

RUSSELL SEARANCKE

Darwin, Australia

East Timor has allocated 950 hectares of land along its southern coast that will be used as a services and supply base for the upstream oil and gas industry and for downstream processing including liquefied natural gas. Alfredo Pires, the country’s Minister for Natural Resources, said the land designated was part of the government’s plan to create a gas hub to service the northern Timor sea fields, while Darwin in northern Australia could continue to service the southern part of the Timor sea.

Currently, all of the main services requirements for exploration and production in the Timor sea between East Timor and Australia come from the Northern territory in Australia.

Pires said the government had allocated 400 hectares in Suai for the development of a supply base, 300 hectares of land in Betano for refineries and petrochemicals, and 250 hectares in Beaco for an LNG facility with production capacity for up to 20 million tonnes per annum of LNG.

These towns are closer to most oil and gas exploration activities and in an area where there are numerous oil and gas seeps, which potentially will be explored in the future,” said Pires. “The shorter distance to the new centres (compared to Darwin) also means savings for the industry. Having these new centres will literally foster a new frontier for East Timor.”

The government is determined that the sunrise LNG plant be located along its south coast, contrary to the Woodside-led Sunrise team’s wishes. the sunrise owners want to develop the project as a floating LNG scheme or via pipeline to Darwin.

The owners aim to file a field development plan to the joint East Timor-Australian commission this year for approval.

Pires said: “One development in the Timor Sea, the Bayu Undan project, has benefited the people of Australia through its infrastructure in Darwin. It is only fair that this time East Timor will benefit from the development of infrastructure from the Greater sunrise (project) with an LNG plant in East Timor.

Maybe future generations could reconcile an alternative agreement (for Sunrise), but our commitment to this project makes it very difficult to reconcile any other agreement than a development, pipeline and LNG plant based in East Timor.”

The government had carried out its own technical and commercial studies on the viability of a pipeline across the Timor trough and found the pipeline and LNG plant are technically feasible, commercially viable and legally merited, said Pires.

The development of Greater sunrise will either transform our nation on shore or remain a distant dream,” he said.

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Upstream, 11 September 2009

East Timor is set for an oil facelift

Russell Searancke

Dili, East Timor

East Timor’s government has put future licensing rounds for offshore and onshore exploration blocks on the back-burner while it focuses on building up its own capacity and reviewing certain legislation.

Officials in the tiny South-East Asian nation had been working up plans to launch a licensing round in the offshore area it shares with Australia, while an offering for onshore blocks has also been talked about for several years.

However, the government is focused on improving its petroleum capabilities, and on minor legislative reforms as it moves to set up new petroleum institutions, said Francisco da Costa Monteiro, petroleum adviser to Minister of Natural Resources Alfredo Pires.

The licensing rounds will be held back until after these matters are dealt with, said Monteiro.

We want things to move at a measured pace. strategically, it makes sense for us to release new exploration acreage in the coming years.”

Building up the country’s petroleum capabilities is a major priority, he said, given that upwards of 700 new Timorese professionals will be needed in the country’s petroleum and mining sectors by 2014.

He said 160 Timorese citizens have this year been funded by the government to attend universities overseas, while the government is also investing in training programmes and secondments to foreign oil and services companies.

Other key focus areas for the government are reforming some existing petroleum legislation and renewing policy.

There is nothing radical planned,” said Monteiro. “We just want to make sure that our legislation conforms to the policies and directions of the government. One of our main principles is to increase East Timor participation in our petroleum and minerals sectors so that we can maximise the benefits for our people.”

There are also likely to be some minor adjustments made to certain legislation, including production sharing contract terms, in the run-up to the next licensing rounds, he said.

Two new institutions are planned to be established -- a national oil company and an institute for petroleum and geology. “We are going to pass legislation this year for those two institutions and hopefully be ready to start them up next year,” said Monteiro.

The country’s petroleum regulator, the National Petroleum authority, has had a heavy workload in recent times, and this is likely to continue, he said.

East Timor has two offshore areas under the control of its own regulator — the Joint Petroleum Development area (JPDA) it shares with Australia, and its sovereign waters off the south coast.

There has been a lot of operational activity in both the JPDA and East Timor’s sovereign area in recent times, and this will continue for the next 12 months.

In the JPDA, Malaysia’s Petronas is about to kick off a three-well exploration campaign in Block 06-102 while Australia’s Oilex has a two-well commitment in Block 06-103 that could start in the fourth quarter. Minza is currently shooting 2D seismic in Block 06-101.

In the country’s exclusive areas, Italy’s Eni is required to drill three deep-water exploration wells in the near future in its blocks A, B, C, E and H, while India’s Reliance has a one-well commitment in the same timeframe in Block K.

Also in the JPDA, Eni’s Kitan oil project is under development while ConocoPhillips is drilling a number of infill wells at the Bayu- Undan field.

The country’s onshore potential has been documented by many onshore oil and gas seeps along its south coast, and these seeps have given the country confidence that an active petroleum system exists.

Monteiro said an acreage release will be delayed until the government has started and completed a full onshore geological mapping exercise, and a new law has been passed covering land and property.

East Timor, which has been an independent country for only seven years, held its inaugural licensing rounds in 2006, both of which were a success.

-- Upstream, 11 September 2009

Russell Searancke

Fretilin bid to unseat coalition

The main opposition Fretilin party in east Timor will begin a campaign in the coming weeks to try to bring down the under-fire government led by Prime Minister and former freedom fighter Xanana Gusmao, writes Russell Searancke.

Former prime minister and Fretilin member Mari Alkatiri said: “We have already made proposals to the government to hold a referendum to let the people decide on continuing with the current de facto government or having a new election. Of course, nothing resulted from that effort. So, in the coming weeks, we will push hard for a vote of no confidence (in this government).”

The Fretilin party has been a relentless critic of the Gusmao-led coalition government, which has been involved in several scandals, and is accused by Fretilin of being secretive and corrupt.

Xanana Gusmao and his government have no respect for the rule of law,” said Alkatiri. “Also, Gusmao treats a budget like a contingency fund so that he can do whatever he likes with it.” Fretilin has waged a media campaign against the government, accusing it of illegal actions in a $385 million heavy oil plant contract — the so-called Ricegate affair — and a memorandum of understanding with Malaysian national oil company Petronas.

Outspoken nongovernmental organisation Lao Hamutuk has joined in, saying the lack of transparency “is so pervasive that it must be addressed at all levels, especially at the top”.

In the last week, Fretilin MPs have walked out of parliament in protest over a decision by the Gusmao-led government to free an Indonesian militia leader, Martenus Bere, who is alleged to be responsible for murders, abduction and rapes in 1999.

Gusmao’s government is a coalition of four parties that has been in power for two years.

The next election is planned for 2012. Alkatiri, who was prime minister for four years between 2002 and 2006, said: This government will not last that long. There is a lot of bad feeling and ill will among the people.”


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