Eni's Kitan Oil Project
|The Italian oil giant Eni has contracts for several offshore areas, both in the Joint Petroleum Development Area (including Kitan and Bayu-Undan) and in Timor-Leste's exclusive territory.|
This web page will collect information and documents relating to Eni's projects in the JPDA other than Bayu-Undan, and will be updated regularly. The company also has a web page on the Kitan project.
For a summary of regulatory activities on this topic in 2008 and 2009, see this excerpt from the Annual Reports of the National Petroleum Authority (ANP).
Kitan (JPDA 06-105) in the Joint Petroleum Development Area
Kitan, a relatively small oil field (estimated to contain 35 million barrels), will be the first to be developed since Timor-Leste restored its independence.
The Timor Sea Designated Authority (TSDA) signed Production Sharing Contract 06-105 with Woodside, INPEX and Talisman on 24 July 2006, replacing interim PSC JPDA 03-01, for Kuda Tasi and Jahal, as announced in this Public Notice Summary.
In September 2007, Woodside sold its 40% share in the contract to the Italian company Eni for USD$23 million, and Eni took over as operator. INPEX retains a 35% share, and Talisman holds 25%. In 2010, Timor-Leste began investigating whether Woodside owes taxes from that sale.
Eni had been in a hurry and did not want to put the test drilling up for competitive bidding. After the wells were drilled, Eni asked the TSDA for approval for having awarded the without a tender, which was granted in April 2008.
The Norwegian drilling rig Songa Venus drilled two appraisal wells at Kitan beginning in January 2008, and struck oil at Kitan in March. Click here for articles about the field exploration and discovery. The TSDA declared Kitan a "commercial area" and Inpex celebrated the find.
During 2009, Eni prepared a draft Field Development Plan to present to the National Petroleum Authority (ANP, the successor agency to the TSDA). They also subcontracted parts of the project.
In January 2010, Eni circulated a draft Environmental Impact Statement for public comment, as part of the Kitan Field Development plan. La'o Hamutuk made a submission in April, asking Eni not to flare the associated natural gas at the field, but to make it available for use in Timor-Leste.
Eni and its partners made their Final Investment Decision (FID) to go ahead with the Kitan project in January, even though it had not yet been formally approved by the regulatory authorities. The contracted with the Dutch Bluewater company to use the Glas Dowr Floating Production Storage and Offloading (FPSO) ship store and sell the oil from the field.
On 22 April 2010, the ANP approved the Field Development Plan (also Tetum), which was also announced by Eni and the RDTL State Secretariat for Natural Resources. The development involves offshore drilling of oil production wells, and installation and operation of a Floating Production Storage and Offloading (FPSO) facility. The projected life of the oil field is about seven years.
Timor-Leste's 2010 General State Budget is the first to contain information about Kitan revenues. Page 51 of Budget Book 1 projects that Timor-Leste will receive a total of $387 million from Kitan between 2011 and 2016, which La'o Hamutuk has illustrated on the graph at right. As of April 2010, when the Field Development Plan was approved, this adds $10 million each year to the Estimated Sustainable Income. (The ESI was not recalculated for the 2010 mid-year rectification budget, so Kitan is not yet included.)
In May 2010, Kitan JV partner Inpex published a summary of the field's status in their annual report.
Eni, kompania mina-rai jigante ida husi Italia, hetan kontratu ba area tasi, iha Area Dezenvolvimentu Petroleu Konjunta (JPDA) nia laran no iha area eskluzivu Timor-Leste nian.
Pajina web ida ne’e sei halibur informasaun no dokumentus sira ne’ebe iha relasaun ho projeitu sira iha JPDA, esklui Bayu-Undan. Ami sei atualiza regularmente. Kompania mos iha pajina web kona-ba projeitu Kitan.
Atu le'e sumariu aktividades ANP nian atu kontrala projeitu ida ne'e iha tinan 2008 no 2009, hare Relatorio Annual ANP nain (Ingles).
Kitan (JPDA 06-105) iha Areia Desenvolvimentu Petroleu Konjunta
Kitan, ne’e kampu mina-rai ida be relativamente kiik (estimativamente iha baril tokon 35), sei sai kampu min-rai ida ne’ebe primeiru dezenvolve hafoin Timor-Leste restora nia independensia.
Iha loron 24 Julhu tinan 2006 Autoridade Designada Tasi Timor (TSDA) asina Kontratu Fahe Produsaun (PSC) 06-105 ho Woodside, INPEX no Talisman, ne’ebe troka PSC temporariu JPDA 03-01 ba kampu mina-rai Kuda Tasi no Jalal, hanesan anunsia ona iha Rezumu Anunsio Publiku ne’e.
Iha fulan Setembru 2007, Woodside faan ninia sahin 40% ho kontratu ne’e ba kompania mina Italia nian Eni ho folin tokon US$23, no Eni sai operador. INPEX iha sahin 35% hela no Talisman kaer 25% restu. Iha tinan 2010, Timor-Leste hahu investigasaun atu hatene se Woodwide tenke selu taxa husi komersiu ida ne'e.
Eni iha ansiozu nia laran no lakohi loke prosesu koko atu fura nian ba prosesu tenderizasaun ida ne’ebe kompetitivu. Hafoin posu mina-rai nian fura tiha ona, Eni husu ba TSDA atu halo aprovasaun hodi hetan kontratu lahoo tender, ne’ebe hetan aprovasaun iha Abril 2008.
Ekipamentu fura Songa Venus husi Noruega, fura posu rua hodi koko iha Kitan iha Janeiru 2008, no hetan mina-rai iha fulan Marsu. Hanehan iha ne’e atu hetan artigu sira kona-ba eksplorasaun no deskobrimentu kampu Kitan nian. TSDA deklara katak Kitan nudar “area komersial’ ida no Inpex selebra nia deskobrimentu.
Durante 2009, Eni prepara esbosu dezenvolvimentu kampu nian ida atu aprezenta ba Autoridade Nasional Petroleu (ANP), ajensia ida ne’ebe troka TSDA). Eni mos subkontrata parte balun husi projeitu ne’e.
Iha Janeiru 2010, Eni sirkula esbosu Afirmasaun Impaktu Ambiental ida hodi hetan komentariu husi publiku, nudar parte ida husi Planu Dezenvolvimentu Kampu Kitan nian. La'o Hamutuk halo submisaun iha Abril, husu ba Eni atu labele sunu sai gas natural sira husi kampu ne’e ba kalohan, maibe atu halo gas ida ne’e hodi bele utiliza iha Timor-Leste.
Eni no nia parseiru sira halo sira nia Desizaun Investimentu Final (FID) atu hahuu projeitu Kitan iha Janeiru, maske formalmente, seidauk hetan aprovasaun husi autoridade regulador. Hafoin fo kantrata ba kompania Dutch Bluewater (“Tasi Azul”) atu uza Glas Dowr, Ro Namlele ba Produsaun, Armajen no Hasai (FPSO) hodi rai no fan mina-rai husi kampu.
Timor-Leste nia Orsamentu Jeral Estadu 2010, primera-vez inklui ho informsaun kona-ba rendimentu Kitan nian. Pajina 51 husi Livru Orsamentu 1, projeita katak Timor-Leste sei hetan total tokon $387 husi Kitan dentru 2011 no 2016, ne’ebe La’o Hamutuk ilustra iha grafika ida iha liman los. Hanesan iha Abril 2010, wainhira Planu Dezenvolvimentu Kitan nian hetan aprovasaun. Ida ne’e aumenta tokon $10 kada tinan-tinan ba Rendimentu Sustentavel Estimadu. (Orsamentu Rektifikativu 2010 la halo fali kalkulasaun ba RSE/ESI, entaun seidauk inklui rendmentu Kitan nian.)
Iha fulan Maiu, parseiru konsorsiu INPEX publika rezumu status kampu nian iha sira nia relatoriu anual.
Click on any image to see it larger.
Revenues received and projected as of early 2010
Transocean Legend drilling unit / unidade fura.
Bluewater Glas Dowr Floating Production vessel
Kitan and Deepwater Horizon
The three production wells at Kitan will be drilled by the Transocean Legend, a semi-submersible mobile offshore drilling unit. The MODU is owned by Transocean Limited, the company which BP subcontracted with to drill and operate the Deepwater Horizon well which killed eleven workers and continues to spill huge amounts of oil into the Gulf of Mexico. We hope that Timor-Leste and Australian authorities are learning lessons from that disaster. Here are a few relevant comparisons between the two projects:
Kitan no Deepwater Horizon
Posu produsaun tolu iha Kitan sei fura husi Transocean Legend, (MODU) unidade fura ne’ebe bele movel no tun rasik iha tasi laran. MODU ne’e nia nain mak Transocean Limited, kompania ida ne’ebe hetan subkontrata husi BP (British Petroleum) atu fura no halao operasaun ba posu Deepwater Horizon ne’ebe hamate trabalhador ema nain sanulu resin ida no kontinua halo fakar mina-rai ho montante ida ne’ebe boot ba iha Tasi (Teluk) Mexico. Ami espera katak Autoridade Timor-Leste no Australia aprende lisaun husi dezastre ida ne’e. iha ne’e iha komparasaun balun ne’ebe relevante entre projeitu rua ida ne’e:
|The websites of the National Petroleum Authority and the State Secretariat for Natural Resources also contain information about the Kitan project, although they are not updated regularly.|
Kitan Local Suppliers’ Briefing
On 23 June 2010, Eni and the ANP held a meeting "Bringing Supply and Demand Together for the Kitan Project” for local companies to hear about Eni and its sub-contractors’ plans for Kitan, the supplies and expertise required to fulfill them, and how they think Timor-Leste businesses could contribute. Article 5.4 of Eni's Production Sharing Contract requires Eni to give Timor-Leste suppliers “a real opportunity to compete for goods and services,” as well as employment preference to Timor-Leste workers with adequate skills. Eni has established a business partnership with Peace Dividend Trust to find local businesses for the Kitan project. In Australia, the Northern Territory Industrial Capability Network (NTICN – supported by the NT Department of Business and Employment) is similarly to win contracts for NT-based companies. The NTICN and Eni held a similar conference in Darwin on 24 June.
Briefing ba fornesedor lokal ba Kitan
Iha 23 Junhu 2010, Eni no ANP halo enkontru ida "Lori Fornesimentu no pedidu konjunta ba projeitu Kitan” ba kompania lokal atu rona planu Eni no nia sub-kontrator sira ba Kitan, fornesimentu no konhesimentu nesesariamente ba sira atu kumpri, no oinsa sira nia hanoin katak negosiantes Timor-Leste nian bele kontribui ba. Artigu 5.4 husi Kontratu Fahe Produsaun Eni nian husu ba Eni atu fo “oportunidade real ida atu compete ba bens no servisu,” ba fornesedor husi Timor-Leste, hanesan mos preferensia empregu ba trabalhadores Timor-Leste ho skill ne’ebe adekuadu. Eni estabelese negosiu parseria ho Peace Dividend Trust atu buka negosiante lokal ba projeitu Kitan. Iha Australia, rede kapasidade industrial Northern Territory nian Northern Territory Industrial Capability Network (NTICN - ne’ebe hetan suporta husi Departamentu Negosiu no Empregu Northern Territory) similarmente atu manan kontratu ba kompania ne’ebe nia bazei iha NT. NTICN no Eni halo konferensia ida ne’ebe hanesan iha Darwin iha 24 Junhu.
In early October 2010, Eni announced a public consultation on the Kitan Environmental Impact Statement (abridged below). Although drilling has already started, the EIS will cover all aspects of the Kitan project production, and input is important for future phases. Eni wrote:
All members of the public, businesses and interest groups are invited to comment on the Environmental Impact Statement prepared by Eni for Kitan Development. The Development is being assessed by the Timor-Leste and Australian government. The draft EIS was submitted to the Timor Leste Autoridade Nacional do Petróleo (ANP) in February 2010, and has been reviewed by Timor-Leste agencies and the Australian Department of Resources, Energy and Tourism (DRET). Eni has now issued the Final EIS.
The Final EIS is available for public comment until 19 November 2010, at www.eni.com/kitan [or below]. Hard copies can be requested by telephone on +61 (0) 8 9320 1132. Any queries, opinions or requests for information on Kitan may be forwarded to Eni in writing as follows:
Respondents must provide their name and address, and should refer to section numbers and page numbers (e.g. Section 2.2.3, page 31) when raising specific queries. Eni will forward an acknowledgement of receipt for all submissions received, and will endeavour to provide a response to each submission. Eni will also provide copies of all submissions to the ANP and DRET, if requested. Any stakeholder comments resulting in a change to the environmental management of the Kitan Field Development will be incorporated into the environmental management plan for the relevant project phase.
La'o Hamutuk has shrunk the files and posted them on our website. The original, higher-resolution ones are on Eni's website.
Timor-Leste's General State Budget for 2011 was the first to include Kitan revenues as part of the Estimated Sustainable Income calculation: "Kitan’s Low and Base Production Cases are 23 and 35 million barrels of oil respectively over the life time of the project. The total revenue stream based on the Low Production Case is equivalent to $145 million." This increases the ESI by about 0.5%, or $4 million per year. In the 2012 State Budget, Kitan revenues were projected at $34 million in 2011, $89m in 2012, $46m in 2013, $62m in 2014 and $16m in 2015, for a total of $247.1 million "or some 1% of Bayu-Undan."
On 10 June 2011, the oil industry publication Rigzone published a comprehensive article Kitan Field Start-up will be G'Day for Eni, detailing the subcontractors involved.
Production at Kitan started during the first week of October 2011, and was announced by the National Petroleum Authority and described in Petroleum Economist. The ANP published less prudent estimates of future revenues than the $247.1 million given in the 2012 state budget documents. ANP's more optimistic price and production assumptions result in $740 million in state revenues over the life of the project, of which 90% ($666 million) will come to Timor-Leste.
Iha inisiu Outubru 2010, Eni anunsia konsultasaun publiku ida ba Deklarasaun Impaktu Ambiental (DIA) ba Kitan (habadak tiha iha okos). Maske perfurasaun hahu tiha ona, DIA sei kobre aspeitu tomak husi produsaun projeitu Kitan, no input ne’e importante ba faze futuru. Eni hakerek:
Publiku, negosiante no grupo interesante hotu hetan konvida atu fo komentariu ba Deklarasaun Impaktu Ambiental ne’ebe prepara husi Eni ba Dezenvolvimentu Kitan. Dezenvolvimentu ne’e hetan ona aprovasaun husi Governu Timor-Leste no Australia. Esbosu DIA ne’e entrega tiha antes ne’e ba Autoridade Nasional Petroleu (ANP) iha Fevereiru 2010, no hetan ona komentariu husi ajensia Timor-Leste no Departamentu Rekursu, Enerjia no Turismu (DRET) Australia nian. Oras ne’e Eni fo sai ona DIA final.
DIA final bele hetan komentariu husi publiku to’o 19 Novembru 2010, iha www.eni.com/kitan (ka iha okos). Kopia surat tahan bele husu liu husi telephone iha +61 (0) 8 9320 1132. Duvida, opiniaun ka pedidu ruma ba informasaun kona-ba Kitan bele hakerek ba Eni hanesan tuir mai:
Respondentes tenke tau sira nia naran no enderesu, no tenke refere ba numeru sesaun no numeru pajina (ezemplu, Section 2.2.3, pajina 31) bainhira foti duvida spesifiku. Eni sei haruka fali resibu rekonhesementu ba submisaun tomak ne’ebe simu ona, no sei esforsu atu fo resposta ba kada submisaun. Eni mos fo kopia husi submisan tomak ba ANP no DRET, karik presiza. Kualker komentariu husi parte interesadas hodi hamosu mudansa ba iha planu jestaun ambiental husi Dezenvolvimentu Kampu Kitan sei inkorporadu ba iha planu jestaun ambiental ba fase projeitu relevante.
La’o Hamutuk hamenus arkivu sira no publika iha ami nia website. Orijinal ho ida ne’ebe nia rezolusaun as iha website Eni:
Ba hetan produsaun iha tinan 2011
Primeira vez OJE 2011 Timor-Leste nian inklui rendimentu Kitan nudar parte husi kalkulasaun Rendimentu Sustentavel Estimadu (RSE):”Kitan nia Low and Base Production Cases iha tokon 23 no tokon 35 baril husi mina-rai durante projeitu ne’e nia moris tomak. Total rendimentu “kdadalak”/stream bazeia ba Low Production Case ne’e ekivalente ba tokon $145.” Ne’e aumenta RSE 0.5%, ka tokon $4 kada tinan. Iha orsamentu 2012, rendimentu Kitan projekta ba tokon $34 iha 2011, tokon $89 iha 2012, tokon $46 iha 2013, tokon $62 iha 2014 no tokon $16 iha 2015, hodi sai total tokon $247.1” ka hanesan 1% husi Bayu Undan.”
Iha 10 Junhu 2011, publikasaun industria petroleu nian Rigzone publika artigu komprehensivu ida Kitan Field Start-up will be G'Day for Eni, hodi publika sai subkontrator ne’ebe involve.
Produsaun iha Kitan hahu’u durante semana primeiru Outubru 2011, no anunsia ona husi Autoridade Nasional Petroleu. ANP publika estimatizasaun ne’ebe ladun prudente ba rendimentu futuru duke tokon $247.1 ne’ebe hateten iha dokumentus OJE 2012. ANP optimistiku liu ba asumsaun ba presu no produsaun hodi rezulta tokon $740 iha rendimentu estadu durante projeitu ne’e nia moris tomak, ne’ebe 90% (tokon $666) sei mai Timor-Leste.
|Kitan began paying FTP (royalties) to the National Petroleum Authority (ANP) in November 2011. Timor-Leste gets 90% of these under the Timor Sea Treaty: In September 2012, Kitan paid its first "profit oil" taxes, having paid off its capital investment in less than one year of operation.|
Kitan revenues peaked in early 2013 and have declined significantly since then, as shown in the graph on the right side of this page and described in our March 2014 blog article Oil production inevitably declines.
The table below is in millions of U.S. dollars. It shows royalties and profit oil, but does not include corporate taxes paid directly to the Ministry of Finance (figures available to La'o Hamutuk are not separated according to each project). Taxes are significant: during 2013, for example, royalties and profit oil from all projects totaled $1.8 billion, while petroleum taxes brought in another $1.2 billion to Timor-Leste's Petroleum Fund.
|Kitan hahú selu FTP (royalty) ba Autoridade Nasionál Petróleu (ANP) iha Novembru 2011. Timor Leste hetan 90% bazeia ba Tratadu Tasi Timor. Iha Setembru 2012, Kitan selu 'mina lukru' taxa primeira vez, tanba selu fali ona investimentu kapital, maski operasaun tinan ida deit.|
Produsaun husi Kitan hahu atu tun iha fulan Marsu 2012, no reseita tun ona to tokon $15 kada fulan, kompara ho tokon $60 tinan ida liu ba. La'o Hamutuk esplika konsekwensia prosesu ida ne'e iha Labele evita produsaun petróleu atu tun iha Marsu 2014.
Tabela tuir mai hatudu tokon dolar EUA.
By way of comparison, the right hand column lists the income from Bayu-Undan to ANP. Both projects also pay taxes directly to the Ministry of Finance, which average about $110m/month for Bayu-Undan. Kitan taxes are smaller than Bayu-Undan's, but could be tens of millions of dollars. More precise information on taxes paid by Kitan is difficult to obtain, as reports are disaggregated by company but some companies are partners in more than one project. Link to more information on sources of petroleum revenue.
Some information about Kitan startup is in the ANP's Fourth Quarter 2011 Report (Tetum), which includes this graph of daily Kitan production during the quarter, and more information is in ANP's Annual Reports for 2011 and 2012, which include photos.
In April 2013, Eni, TimorGAP and INPEX signed Production Sharing Contract JPDA 11-106 with the ANP for 662 km2 which had been relinquished from the Kitan contract area. If a commercial discovery is made while Kitan is still in production, the companies plan to use Kitan's production facilities to exploit it.
The Stena Clyde semi-submersible drilling rig drilled the sixth Kitan well in November 2013, and it is also drilling two test wells in the newly licensed area.
In March 2014, La'o Hamutuk published Oil production inevitably declines, exploring the implications of Kitan production peaking in March 2012, with revenues having fallen to 1/4 of their level a year ago. An EITI supplement, published in August 2016, summarizes Kitan production and revenues in 2013.
In early April, Talisman announced that it wanted to sell its 25% share in the Kitan project, as well as its share of Laminaria-Corallina. On 24 June, Malaysian company Hibiscus Petroleum announced it was purchasing Talisman's share of Kitan for $18 million. It will be the new company's first producing asset. Australian regulators approved the deal in August, and Acquisitions International magazine celebrated the "Deal of the Month." On 4 March 2015, Talisman wrote "The sale is expected to close in 2015 with an effective date of January 1, 2014." Less than three months later, Hibiscus cancelled the sale (details below).
|Bainhira kompara, hosi koluna sorin liman los nian lista royalty hosi Bayu-Undan nian, ne’ebé boot liu dala tolu kompara ho Kitan. Aleinde ne’e, Bayu-Undan selu ba Timor Leste (liu hosi ANP) maizumenus tokon $150 kada fulan hosi “lukru mina-rai” nian, Kitan hahu selu wainhira kompaña sira rekopera ona sira nia kapital investimentu iha Agostu 2012. Projetu rua ne’e selu taxa direitamente ba Ministeriu Finansas rata-rata tokon $110 kada fulan hosi Bayu-Undan. Kitan nia taxa provavelmente kiik liu kompara ho Bayu-Undan nian, maibé bele liu tokon ruanulu dolares. Informasaun klaru liu kona-ba taxa hosi Kitan nian ne’e dalaruma publiku labele hetan ba fulan barak nia laran. Liga atu hetan informasaun tan kona-ba fontes reseitas petróleu.|
Iha informasaun balu kona-ba projetu Kitan komesa la’o iha ANP nia Relatoriu Trimestral ba Dahaat tinan 2011, ne’ebé inklui mos gráfiku iha liman karuk kona-ba Kitan nia produsaun lor-loron nian durante trimestre. Bele hetan informasaun tan iha Relatoriu Anual ANP nian 2011 no 2012.
Iha fulan Marsu 2014, La'o Hamutuk publika ona Labele evita produsaun petróleu atu tun, diskute impliksasun sira husi produsaun Kitan nian tun hafoin fulan Marsu 2012, no reseitas tun ona ba nivel 1/4 kompara ho tinan ida liu ba.
Iha fulan Abril 2014, Talisman fo sai katak nia hakarak faan ninia parte projetu Kitan ba Hibiscus Petroleum husi Malasia, maibe iha Junu 2015, Hibiscus kansela prosesu ida ne'e.
Total Kitan revenues to Timor-Leste during 2014 were only $50.1 million, less than one-sixth of their level the previous year, partly due to lower oil prices but mainly because the field is nearing depletion. Nevertheless, Eni remained optimistic about the Kitan field, as a third production well allowed it to increase production rates.
On 23 March 2015, INPEX announced that it was reducing its expectation of future returns from its 35% share of Kitan by 7.5 billion yen (US$63 million) mainly due to "deteriorating market environments," as explained in Australian media. A Timorese newspaper wrote that the Government didn't know about INPEX's plans to withdraw from Kitan, but it's not clear whether the journalist understood the issues.
In May 2015, Repsol acquired the entire Talisman company.
On 1 June, Hibiscus announced that it had retracted its offer to buy Talisman's 25% share of Kitan because "Conditions Precedent have not been fully satisfied" by the seller. In response to questions from Malaysian regulators, Hibiscus explained that Talisman had not met clauses 2.1(c) and 2.3(c) of their Share Sales Agreement on time, although Talisman disagreed. The cancellation of the sale was reported in the trade media Rigzone and Upstream.
Although Eni had contracted Kitan's floating processing platform until October 2016, at the beginning of September 2015 Eni announced that it was terminating the contract ten months early, even though it will have to pay a penalty. As a result, Kitan production is expected to end by mid-December 2015. On 14 December, Platts reported that Kitan was no longer shipping cargoes on the spot market. In the local press, ANP President Gualdino da Silva acknowledged (right) that production had stopped but said that there is still oil in the Kitan field. According to ANP's website, Kitan made its final royalty payment in December 2015.
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)