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South Coast Petroleum Infrastructure Project16 September 2011. Updated 17 February 2012.Liga ba pajina ida ne'e iha Tetum.
Tasi Mane (Male Sea -- the Tetum name for the Timor Sea between Timor-Leste's south coast and Australia) is the name for the centerpiece of the Timor-Leste Government's development strategy -- a corridor of petroleum infrastructure along the southwest coast of this country. The ambitious project is described in the Strategic Development Plan (excerpt) as "a multi-year development of three industrial clusters on the south coast which will form the backbone of the Timor-Leste petroleum industry."
This page will be expanded as the project develops. It discusses the following:
Environmental Impact Assessment On 25 August 2011, the RDTL National Procurement Commission invited bids from consultants interested in conducting an Environmental Impact Assessment (EIA) and developing an Environmental Management Plan for eleven components of this project, as described in the Bidding Documents and addendum. Although the Bidding Documents say that the EIA should be "conducted based on Decree-Law 5/2011 on Environmental Licensing," the National Environment Directorate staff responsible to administer that law did not know about it until La'o Hamutuk brought it to their attention. Furthermore, the tender documents are inconsistent with the decree law and provide insufficient information to prepare a proper Environmental Impact Assessment. They appear to envision something like a baseline study to be submitted to the State Secretariat for Natural Resources after four months of work by nine technical experts. The EIA consultant will be paid from the Infrastructure Fund, which includes $31.1 million for Tasi Mane in 2011, of which $6.7 million had been spent by the end of August. The 2012 State Budget allocates $2.1 million for Tasi Mane "environmental studies." The EIA contract was awarded to the Australian engineering company WorleyParsons which also provides support for Bayu-Undan operations. From our understanding, they have not been given enough project-specific information to analyze its environmental impacts, especially for project components other than the Suai Supply Base. According to the TOR, "The Area of EIA study works will encompass, but not limited to, the following: Prioritizing petroleum over more sustainable sectors In late 2010, La'o Hamutuk expressed concerns that the 2011 state budget allocates over $30 million for the Tasi Mane project, more than twice as much as the Ministry of Agriculture. We lamented the nearly exclusive focus on the petroleum industry (and resulting lost opportunities to explore other possibilities for economic development) in our July 2011 comments on the Strategic Development Plan: "Since there is consensus that Timor-Leste needs to move away from oil-dependency in the long-term, we are disappointed that petroleum processing is the only industrial development discussed. What about agricultural processing, or light industry to replace imported products? The capital-intensive oil industry will provide few jobs for anyone, including Timorese. Allocating most of our intellectual and financial resources to the petroleum sector obstructs moving to a non-oil economy after oil and gas reserves are used up in 13 years." The 2011 UNDP National Human Development Report "Managing Natural Resources for Human Development: Developing the Non-Oil Economy to Achieve the MDGs" discusses similar issues. We also wonder about the economic viability of the Tasi Mane project, given that no private sector investors have shown interest. From an investment perspective, the returns may not justify the amount of public money being expended. The Beaçu LNG plant will require natural gas from the Greater Sunrise field which the oil companies who hold the contracts don't want to bring to Timor-Leste. The Suai supply base may not have any offshore projects to supply if there are no new discoveries after Kitan is exhausted in 2016. The Betano power plant has drawn community opposition, and the adjoining refinery will be far from Timor-Leste's main cities. So far, nearly all the money spent on this project has gone to foreign companies, providing hardly any local employment or spinoffs. The biggest contracts to date are with local brokers for international companies, most of which were signed in the final weeks of Budget Year 2010. La'o Hamutuk downloaded these relevant contracts from the Procurement Portal on 15 September 2011; it doesn't yet include open tenders (such as the EIA consultant described above) or contracts awarded after June 2011.
Protest and socialization in Betano
On 12 September, Justice Minister Lucia Lobato, Secretary of State for Environment Abilio Lima, and Francisco Monteiro (representing the State Secretariat for Natural Resources) met with the community in Betano to explain the state's policies on land, environment, the heavy oil electricity project, and the Tasi Mane project. La'o Hamutuk observed that the Government's explanations did not address the community's concerns about the impacts of this huge project on their lives, but only urged them to accept the Government's model for development. Justice Minister Lobato repeatedly said "The Tasi Mane project, the Government must move to the future, the State will use strong force to make this project a reality, to bring oil to the South Coast." Environment Secretary Lima said "Like it or not, the state must bring this big project to benefit our nation in the future..." SERN representative Monteiro explained that "This project will need some land, for the refinery and for the New Betano special community ... We very much agree that this project will go forward. New Betano will be a new city to support the oil industry ..." On the other hand, the Betano community expressed their ideas about this project. They questioned the plan to take land for a refinery, petrochemical industry, and power plant. They asked about the environmental impacts from pollution and wastes which this project will produce. One community member, Manuel da Costa, said "the south coast land will be a Promised Land for Timor-Leste's development, but we children of Betano will become victims of development. We from Betano support development, but our needs must be considered." On 2 September, the Council of Ministers approved Resolution 26/2011 (also Portuguese), appointing the Singaporean company Eastlog Holding PTE as consultant and specialist to execute an "Engineering, Procurement and Construction" contract for the Suai supply base, estimated to cost $273-$347 million. Eastlog will be paid $6.6 million, and is expected to invest $12-$15 million of its own funds in the project. When finished, the Supply Base will be leased for the exclusive use of the TimorGAP National Oil Company, which will own the project and be expected to cover an estimated $8 million in annual operating costs. Francisco Monteiro was named President of TimorGAP on 28 September. The 2012 State Budget allocates $164 million for the Tasi Mane project, including $100 million for the Suai supply base and $45 million for the Suai-Beacu highway, whose final price could exceed a billion dollars. La'o Hamutuk concludes that the state could be giving a $156 subsidy to every motorist who drives the road's 152-km length. Our submission to Parliament on the State Budget discusses the Tasi Mane project on pages 12-13, and the following table shows project expenditures, in millions of U.S. dollars, as authorized by the 2012 State Budget.
According to the Government's Transparency Portal, $8.3m of the 2011 appropriation of $18.9m for Tasi Mane had been spent by 18 January 2012 , although $10.5m more was committed or obligated. This appropriation is channeled through the Infrastructure Fund, which can be carried over from one year to the next without reappropriation. La'o Hamutuk urged Parliament not to authorize funding for Tasi Mane project construction until a solid economic cost/benefit analysis has been presented and discussed by Parliament. This needs to be more substantive and realistic than the glossy visions of the Strategic Development Plan, and should include accurate and detailed cost information and revenue and employment projections for the full project cycles. We also encouraged them to insist on a legitimate EIA and genuine community consultation, with free, prior and informed consent, before spending more on any element of the Tasi Mane project. However, the budget was enacted without changes to the Government's proposal for this project.
In late December 2011, the National Procurement Commission carried out a tender for detailed engineering design for rehabilitating the Suai airport, announcing its intention to award a $930,000 contract to the Malaysian company Jurutera Perunding Zaaba Sdn Bhd. Community concerns about the 1,264 hectares of land that will be taken for the Supply Base and Nova Suai heightened in January 2012, and local residents invited the national Land Network (Rede ba Rai) to come to explain their rights, as reported in the Timor Post (Tetum) "Building the Supply Base: Think well when offering land" on 26 January. In early February, State Secretary for Natural Resources Alfredo Pires gave a long interview to Timor-Leste television explaining the rationale for the Supply Base. He made a similar case in a full-page paid Government notice (Tetum) "Government Wants to Share Development for all Coasts in Timor-Leste" in Diario Nacional on 13 February. Four days later, local newspapers included an advertisement for 22 positions with TimorGAP relating to several components of the Tasi Mane project, as well as an interview with TimorGAP President Francisco Monteiro (Tetum) explaining that "TimorGAP will be directly involved in oil exploration."
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The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk) |
