|Subject: DJ: Timor to Sign 1st Offshore
Exploration Deals in Mid-June
E Timor to Sign 1st Offshore Exploration Deals in Mid-June by Irene Tang Thu, Mar 9, 2006 19:06 GMT
SINGAPORE - East Timor aims to sign its first offshore upstream production-sharing contracts by mid-June, a government official said Thursday.
Speaking to delegates at the 11th Asia Upstream conference in Singapore, Geir Ytreland, project manager of the Oil, Gas & Energy Directorate under the Ministry of Natural Resources said East Timor has just finished the pre-qualification round.
However, the deadline for submission of bids to the Oil, Gas & Energy Directorate has been deferred to April 19 from March 17 due to legal issues, including a delay in translating the information into Portuguese.
Last August, East Timor launched its first bidding round for petroleum exploration rights in the Timor Sea, offering 11 contract areas covering a total 30,000 square kilometers. It badly needs oil revenue from these soon-to-be inked PSCs as a means to alleviate poverty.
Under the PSC terms, profits are split 60%-40% between the operator and the government. Foreign operators also have to pay a 5% royalty fee to the government. The PSC contracts cover a seven-year exploration period and a 25-year production period.
Dili will plow its oil revenues back into its Petroleum Fund, to be used to partly offset the country's budget shortfall.
Meanwhile, a U.N. report, released Thursday, urged East Timor to invest its newfound wealth from oil and natural gas into rural development projects in order to lift its population out of abject poverty.
The U.N. Development Report said with the gradual departure of thousands of well-paid peacekeepers and international administrators who helped shepherd the former Indonesian province to independence in 2002, East Timor is actually getting poorer by the day.
The tiny nation has an annual per capita income of $370, and about 40% of its 800,000 people still live below the official poverty limit set at $0.55 a day, said the document, which was jointly prepared by the U.N. agency and the East Timorese government.
But East Timor's prospects brightened significantly in January when it signed a joint treaty with Australia allowing for oil and natural gas exploitation in the Timor Sea, which lies between the two countries. The deal will earn Dili at least $10 billion in coming years.
"It is vital for us to ensure that these funds are managed in a way that benefits all communities in Timor-Leste," Prime Minister Mari Alkatiri was quoted as saying in the report.
© 2006 Dow Jones Newswires.