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Petroleum Policies of the new Timor-Leste Government

La'o Hamutuk Public Meeting with Alfredo Pires, Secretary of State for Natural Resources

20 September 2007

The Petroleum Sector continues to be the largest contributor to Timor-Leste’s economy. The experiences of other nations teach us that this sector gives many promises and many risks. Because of this, we need good policies to avoid and minimize these dangers. During the last five years, the past Government has established some legal foundations for managing the petroleum industry and conducted negotiations about sharing Timor Sea resources. But some issues remain for the new Government to solve or improve. In order to participate in this process, we all must understand the policies and programs of the new Government.

Secretary of State for Natural Resources Alfredo Pires
 and Santina Soares of La'o Hamutuk

Therefore, La'o Hamutuk organized a public meeting to share information to the public and civil society organizations about how the new government plans to develop natural resources and manage petroleum revenues. Secretary of State for Natural Resources Alfredo Pires spoke for almost two hours, and then answered questions for another hour. Click for his PowerPoint presentation (in Tetum).

We have not yet translated his presentation into English or transcribed his talk. Here is a translation of Secretary Alfredo's main points:

General Principles

  • Petroleum is a motor to drive Timor-Leste's development in non-oil sectors.

  • Timorese people will be strongly involved in the oil sector at all levels

  • Optimize the usage of natural resources

Mandate of the State Secretariat for Natural Resources (SERN) (according to the Organic Law of the Fourth Constitutional Government, Article 16)

  1. Develop policies
  2. Establish contact with international investors
  3. Establish laws and regulations
  4. Accompany application of treaties (IUA and CMATS)
  5. Determine the conditions for exploration
  6. Ensure transparency, according to international practice
  7. Enforce the law regarding oil resources and activities
  8. Authorize and supervise Production-Sharing Contracts
  9. Promote new exploration and develop existing projects
  10. Keep a file of information
  11. Measure and verify production
  12. Monitor operators to ensure that they follow the law
  13. Issue mineral exploration licenses
  14. Establish mechanisms for coordination with other Government organs

Program of the State Secretariat for Natural Resources

  1. Immediate reform
  • Divide old Ministry of Natural Resources in three parts

  • Tetun will be internal language within SERN

  • Close Timor Sea Office (boundary negotiations are done)

  • Reorganize staff

  • Integrate SERN and TSDA in the Fomento Building

  1. Legal reform
  • Develop Petroleum Optimization Law, which includes Timor-Leste Petroleum Authority and Timor-Leste National Oil Company

  • Petroleum Depletion Law (to manage production according to Timor-Leste's interests)

  1. Develop human resources
  • Need 100 technical professionals, who will be chosen from a competitive hiring process. Existing staff who are not qualified will be offered scholarships to improve their qualifications. There are already 20 graduates, and another 80 studying in Indonesia, with about 10 in Australia and other countries.

  • 30% of scholarships will go to women

  1. Timor-Leste Transparency Model (EITI)
  • Four Phases: money comes (EITI), money sits (investment), remove money (transfer to budget according to Estimated Sustainable Income), spend money (budget execution).

  • Continue previous government's commitment to Extractive Industries Transparency Initiative (EITI), but need to reassess budgets of EITI and Petroleum Fund Consultative Council, which total about $1 million.

  1. Work to get Sunrise pipeline to Timor-Leste
  • Negotiations with Australian government finished with CMATS and IUA

  • In discussions with Woodside

  • Sunrise Development Plan must be approved within six years and production start within ten years or CMATS can be cancelled by either party.

  • Will form "Pipeline Task Force" with Timorese and internationals to study technical, commercial, and socio-economic aspects.

  • Government will take initiative to look for gas customers

  • Government will look for other gas fields (e.g. Abadi in Indonesia, operated by the Japanese company INPEX) which could be piped to Timor-Leste.

  1. Create 1:25,000 scale geology map of Timor-Leste to identify potential mineral deposits
  • Create Institute of Geology and Minerals to study these issues
  1. Remove oil sector from party politics
  • Oil sector will become professional

  • Regulatory agency and National Oil Company must be professional

  • Clear objectives: make money for the state and improve human resources

  • Officials must chose between politics and oil (people in oil sector cannot be involved in party politics)

  • Goal: If a new party comes into government in 2012, they will not remove anybody.

  1. Create a Commission on Nonrenewable Resources, composed of representatives of the five most-voted political parties. This will be a space for people outside Government to share their impressions and concerns with SERN.

Managing Oil Money

  • Timor-Leste's economy is weak: non-oil exports $8 million/year, imports $200 million/year.

  • Must invest in human resources

  • Push the private sector toward the future

  • Government will develop a National Development Strategy Plan, to see how much money is needed each year, but we must also look at spending capacity.

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
Rua D. Alberto Ricardo, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-77234330
email: 
info@laohamutuk.org    Web: http://www.laohamutuk.org    Blog: laohamutuk.blogspot.com