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Welcome Statement by Prime Minister Alkatiri, Timor-Leste - Australia Maritime Boundary Negotiations, 19-22 April 2004, Hotel Timor, Dili

I am pleased to welcome the Australian delegation to the start of maritime boundary negotiations between our two sovereign states. As you visit our country, you will see the great importance our people place on the outcome of these talks.

Australia and Timor-Leste have a dispute over the location of our maritime boundary in an area of the Timor Sea all of which is closer to Timor-Leste than Australia.

For Timor-Leste, this is not an academic exercise.

A boundary determined in accordance with established principles of international law-as embodied in the United Nations Convention on the Law of the Sea and as spelled out in decisions of the International Court of Justice-would triple the income of our country.

Concretely, it means the money to immunize and educate every child in Timor-Leste. It means more children will reach the age of five years. It means more lives spent productively. It is, quite literally, a matter of life and death.

For this reason and for the reason of reaffirming our sovereign rights, we attach great urgency to reaching an agreement on a maritime boundary as soon as possible. Better sooner than later. For us, a twenty year negotiation is not an option. Timor-Leste loses one million dollars a day due to Australia's unlawful exploitation of resources in the disputed area. That is too many lost and wasted lives.

We ask Australia to join us in a concentrated schedule of negotiations with sessions held every month. We are Asia's poorest country, but we will find the resources to support this schedule. We ask Australia, which is the region's richest country, to do the same. But, if Australia has a problem marshalling the necessary resources for a more compressed schedule of negotiations, we are prepared to make available some of the funds from our current share of Timor Sea oil revenues to help. This is the importance we attach to these negotiations.

We believe international law supports our claim for a maritime boundary that is at the midpoint between our countries and with eastern and western lines that reflect relevant geographic features.

We are so confident of the legal correctness of our position that we are prepared to have any impartial court-the International Court of Justice, the International Tribunal for the Law of the Sea, or an international arbitral tribunal-decide the matter on the merits.

Just before Timor-Leste's independence, Australia took action intended to prevent these courts from adjudicating the maritime boundary dispute between our two countries.

We know this action was aimed at us. We see it as an implicit acknowledgement of the weakness of Australia's legal case.

Australia is not the only country to avoid international jurisdiction when it feels the law is against it. The rule of law is not only for weakest and the poorest. The powerful nation should be the example.

But Australia is doing something no other country has done in these circumstances. In addition to blocking a judicial resolution of our maritime dispute, Australia is unilaterally taking the resources from the disputed area.

We are confident that, sooner or later, there will be a fair outcome and Timor-Leste will have the maritime boundaries to which it is entitled under international law. But we fear that, when this happens, all the petroleum will already be gone from our areas. This unjust result robs too many of our children of their future.

We again ask Australia to stop the unilateral exploitation of resources in the disputed area. Australia and Timor-Leste have overlapping EEZ entitlements in a large area of the Timor Sea.

We have, however, asked Australia to honour its legal obligation of restraint in only a very small part of this area of overlapping claims-all of which is much closer to Timor-Leste than Australia.

Further, we are open to creative solutions that will not disrupt existing petroleum operations in the disputed area. We would, for example, agree to government royalties and taxes in the disputed area being placed in an escrow account payable to the country that ultimately obtains the area. I hope we can all agree that this is fair.

Unfortunately, Australia has not only refused to exercise restraint in the disputed area, it has actually awarded new licenses in this area since our formal protest last November. Companies operating in any part of the disputed area under an Australian permit should know that they will have no rights in the event a boundary places this area within Timor-Leste. Further, Timor-Leste will prosecute to the full extent of the law those that operate illegally in its maritime areas, as specified in our Diplomatic Note of November 2003.

International law requires countries to exercise restraint by not unilaterally exploiting resources in disputed areas.

Although Australia acknowledged the existence of a disputed area when it signed the Sunrise IUA, it now asserts that its longstanding "occupation" of the disputed area (as evidenced by its unilateral exploitation of petroleum in the area) means it has no obligation of restraint. This "occupation" and exploitation was only possible because of agreements Australia made with Indonesia-agreements premised on recognition of Indonesia's annexation of Timor-Leste.

Indonesia's annexation of Timor-Leste was illegal and the fruit of that illegal act can not be valid. Timor-Leste can not be deprived of its rights or territory because of a crime. And, we are prepared to test this proposition in any international court or tribunal of Australia's choosing.

I believe it is in the interest of both Australia and Timor-Leste to conclude boundaries in the Timor Sea. It is clear that the petroleum industry and potential buyers desire the certainty created by boundaries. This certainty currently does not exist. Because of this risk, Australia and Timor-Leste both pay a premium to the industry.

I very much believe that our two countries can resolve the dispute in the Timor Sea if there is the political will to do so. If not, we might seek the assistance of mutual friends, or look to some other international mechanism.

I will not further delay your negotiations. I look forward to hearing of their outcome.

Thank you

TSO Media Release: DFAT expert supports East Timor's maritime rights, 23 April 2004

East Timor's right to establish a fair maritime boundary in the Timor Sea, and Australia's obligation to negotiate in good faith and not deplete resources in disputed areas, have been supported by a key member of the Australian Government negotiating team that attended talks in Dili this week.

Mr Dean Bialek, an international law expert with the Department of Foreign Affairs and Trade (DFAT), strongly supported East Timor's position in a written submission and testimony to a parliamentary committee, and in a refereed journal article. Mr Bialek made these points while working as a law lecturer at the University of Melbourne, but this week he was a member of the DFAT delegation that came to Dili for talks on maritime boundaries.

Mr Bialek has specific expertise in Timor Sea maritime law. He has published in prestigious international journals, and the Joint Standing Committee on Treaties (JSCOT) gave considerable weight to his submission and evidence when it reviewed the Timor Sea Treaty.

Median line

Mr Bialek strongly questions Australia's reliance on the "natural prolongation"of its continental shelf. He wrote in his 2002 submission to JSCOT: "While the principle of natural prolongation remains valid at international law to support Australia's claim of a shelf out to the Timor Trough, it is increasingly subject to the preference for a median line where there is less than 400 nm between opposite states".

There have been 80 instances where the median line has been applied to resolving overlapping claims (when states are less than 400nm apart). The 1972 Australia-Indonesia Treaty is the only exception. That Treaty was concluded when international law in this area was in its infancy. Opinion is now almost universally in favour of the median line principle.

One of the most authoritative books on maritime boundaries states:

"Geological and geomorphological factors are all but irrelevant, at least in the case of states opposite each other and less than 400 miles apart." Churchill and Lowe (1999), The Law of the Sea, p190.

Lateral boundaries

Australia has repeatedly stated that the lateral boundaries of the Joint Petroleum Development Area (JPDA) are appropriate as a permanent maritime boundary. This denies East Timor a greater share of Greater Sunrise, and the revenue from Laminaria-Corallina and Buffalo fields.

However, MrBialek stated in his JSCOT submission:

"Australia should not regard the JPDA as reflecting lines suitable for a permanent delimitation of the continental shelf between East Timor and Australia. Nor should the JPDA be regarded as reflecting the limits of the area 'under dispute'."

Good-faith negotiations

Australia cannot continue to delay the settlement of the Timor Sea boundaries. East Timor is one of the poorest countries in the world and it is losing $US1 million a day in tax revenue to Australia from three oil fields (Laminaria-Corallina and Bufallo) that lie twice as close to East Timor. East Timor has requested montly meetings to resolve the dispute expiditiously, but Australia says it only has the resources to meet twice a year. DFAT officials have told journalists the negotiations may take 30 years, which is very unfair for a country that desperately needs resources to address mass poverty and national reconstruction.

Mr Bialek wrote in his JSCOT submission: "The Australian Government should remain mindful of the need to engage meaningfully in negotiations for the settlement of permanent maritime boundaries with East Timor."

He added in oral testimony: "There is a general obligation under international law and international relations that there be good faith negotiations toward the conclusion of a permanent boundary. That would, I think, in international law, say that Australia should not drag its feet in terms of reaching a permanent solution."

The obligation of restraint in disputed areas

Australia is unilaterally exploiting disputed areas in the Timor Sea by issuing exploration and production licenses, and by advertising new permits. It has done this even after signing the Greater Sunrise Unitisation Agreement, which states that both countries have made claims in the disputed area. The production permits for the Laminaria-Corallina and Bufallo fields have earned Australia an estimated US$1.5 billion in tax revenue alone since 1999.

As Mr Bialek wrote in his submission to JSCOT:

"There is at least a good faith good faith requirement to seek to discuss a proposal to explore an area subject to conflicting claims."

"Australia should avoid the unilateral pursuit of petroleum development in areas now known to be subject to overlapping claims. Such action would serve to heighten diplomatic unease that complicates the movement forward of plans to exploit the lucrative resources of the Timor Sea for the mutual benefit of Australia and East Timor."

The obligation of restraint can also be found in a joint article by Professor Triggs and Mr Bialek in the Melbourne Journal of International Law.

"There is, however, a legal difference between exploration and exploitation. Australia would be required to refrain from granting a production permit, but mere exploration for gas and condensate potential does not necessarily create a risk of irreparable prejudice to East Timorese interests. Nonetheless, it would be prudent for East Timor, following the entry into force of its Maritime Zones Act, to protect its claims by reaffirming its non-recognition of any interests granted by Australia that are inconsistent with East Timor's rights to an EEZ under international law."

TSO Media Release: Timor-Leste Prime Minister Opens Nation for Petroleum Development, 7 June 2004

Darwin (June 7) - Timor-Leste (East Timor) Prime Minister Dr Mari Alkatiri announced today a new plan for the development of a petroleum industry with the offering of rights for onshore and offshore seismic and geological data acquisition.
The announcement of this data round is the first step in a series of events and actions geared towards the award of Timor-Leste's first exploration licenses in the fourth quarter of 2005. This will be Timor-Leste's first sovereign licensing round. Timor-Leste, as a signatory to the Timor Sea Treaty, is already active in the joint governance of petroleum development in areas of the Timor Sea.
"Recent petroleum geology expert surveys, as well as previously existing seismic survey data, indicate that there is potential for the existence of highly prospective hydrocarbon deposits in some areas both onshore and offshore. We have therefore decided to grant rights to conduct seismic data acquisition surveys," Dr Alkatiri said in his keynote address to the SEAAOC conference in Darwin.
The initiative affirms that Timor-Leste is moving ahead with the development of its petroleum sector, and will not allow the maritime boundary dispute with Australia to frustrate its national development.
Dr Alkatiri said that Timor-Leste will observe international law in offering rights, and unlike Australia will not unilaterally license exploitation in disputed areas.
"Naturally, my Government takes into account the fact that Australia has made jurisdictional claims in some of the areas of the Timor Sea. We will fully observe international law in relation to all petroleum activities, including the obligation to exercise restraint in any areas where Australian claims may conflict with Timor-Leste's," he told the conference.
Bid tender packages will be available by June 15, with bids due by July15. The Government expects to notify successful bidders by the end of July and all work obligations are to be completed before the end of 2004. Parties interested in receiving bid documentation should contact geirytreland@hotmail.com or mail@timorseaoffice.gov.tp

Nation Building in Timor-Leste, Keynote Presentation by Timor-Leste Prime Minister Dr Mari Alkatiri SEAAOC June 2004

I thank you very much for the opportunity to deliver this keynote address on the issue of "Nation Building in Timor-Leste". Timor-Leste recently celebrated its second anniversary of independence after 24 long years of struggle for freedom. Following the UN ballot in 1999 and subsequent militia violence we inherited a nation that had been laid to waste. Most vital infrastructure and institutions had been completely destroyed.

The UN transitional administration and our development partners have made great efforts to start the rebuilding process. Since the restoration of independence in 2002 my government has been building national institutions from the ground up. A major focus has been putting in place the capacity to manage our petroleum resources and revenues from them, which will be the basis for our reconstruction and development for decades to come.

In the near and long term, Timor-Leste's economy will be almost entirely dependent on revenue from petroleum in the Timor Sea. Our resources in the Timor Sea will play a vital role in helping to rebuild our nation and address the many challenges associated with entrenched poverty and under-development. I will therefore take this opportunity to talk about how my government is building a sound economic base and long-term stability in the form of our proposed Petroleum Fund. I will also outline our efforts to put in place transparent and accountable regulations for this vital sector.

Timor-Leste is highly prospective for petroleum in onshore and offshore areas. We have seen a tremendous amount of interest recently from the petroleum industry in developing our onshore and offshore petroleum. Therefore, I will also describe the legal framework that Timor-Leste is establishing to facilitate development of its resources. In particular, I will outline the framework and program that is being put in place for pre-exploration seismic data gathering which we intend to commence within the coming months and to be completed by mid-2005, when the first exploration licenses should be issued.
First, though, I would like to outline our perspective on an issue that you have certainly read about recently in the media: the question of Timor-Leste's maritime boundaries.

Determining future maritime boundaries between Australia and East Timor

A key element of nation building is the right to delineate the extent of a nation's resources area so that we can develop and plan for the future.

Upon the restoration of our independence in May 2002, Timor-Leste claimed its international maritime entitlement through our Maritime Zones Act which includes a claim to resources in the Timor Sea including vast petroleum resources.

Neither Timor-Leste nor any of its previous legitimate administrators ever agreed to delimit its maritime boundaries with its neighbors - including Australia. There have never been maritime boundaries applicable to the territory that is now Timor-Leste. I often hear and read about Timor-Leste wanting to change its boundaries with Australia. There are not and there have never been any boundaries to be changed. There are boundaries to be established.

The establishment of maritime boundaries is an integral part of Timor-Leste's right to self determination. We are very close to finalizing our land border with Indonesia, but we are yet to determine the extent of our maritime resources. We are seeking to put in place the most stable and secure basis for the development of the Timor Sea - a permanent maritime boundary. A permanent maritime boundary will not only be a good outcome for our new nation - it will give investors genuine security and stability.

The issue of security and stability for investors has always been a priority for us. Our agreement to the Timor Sea Treaty was greatly influenced by the need for the investors in the Bayu-Undan project to obtain legal and fiscal certainty to continue with their investments. The Treaty was in the best interest of our people, and it was our recognition of the interests of investors.

In April this year, Timor-Leste and Australian officials met in Dili for the first round of talks on maritime boundaries. Despite our request for monthly meetings, we were only able to get agreement to have the next meeting scheduled for September this year. As someone recently commented, rice and corn crops can be planted and either harvested or fail for our people within that time.

I cannot overstate the importance to Timor-Leste of these talks and of making progress towards reaching agreement on maritime boundaries. To give you a sense of the stakes for our country: under current temporary petroleum development agreements with Australia, Timor-Leste will most likely receive revenues in the order of US $4 billion over the next generation. However, the vast majority of international experts are of the view that a permanent maritime boundary set according to international law would give Timor-Leste significantly greater resources in the Timor Sea - providing revenues potentially in the order of US $12 billion over the same time based on known reserves.

Despite what has been quoted in the media lately, Timor-Leste does not claim these resources because we are poor. Timor-Leste claims these resources because it is our international legal right. Timor-Leste would prefer to support itself from revenues from its petroleum resources, rather than relying on the generosity of international donors. The people of Timor-Leste fought a generation for recognition of our political independence, and we will fight for our economic independence. And as I will outline in a moment, Timor-Leste will soon take a step towards our economic independence. As is our sovereign right, Timor-Leste will initiate the exploitation of our resources with an pre-exploration invitation to the petroleum industry.

We acknowledge the value to the petroleum industry of maritime boundaries. We know that maritime boundaries are the best means to ensure stability for further investments in the Timor Sea.

Sadly, the outlook after the April round of negotiations is quite hopeless in our view. The Australian response with respect to our claim on the lateral boundaries - where the vast wealth of the resources and revenues are - was that the lateral boundaries are non-negotiable beyond the current JPDA limits. These lines have no relevance other than given in the temporary Timor Sea Treaty, which is a temporary treaty, pending the settling of the permanent maritime boundaries between our two countries. Australia takes this position in spite of the fact that the Treaty specifically states that it shall not prejudice the rights of the two countries relating to seabed delimitation. Further as I said earlier, they are not willing to meet more frequently than every six months on other negotiations. This alone has signaled to many of us the lack of seriousness or commitment to resolving this issue.

Beyond the importance to Timor-Leste of the resources at issue, the unfairness of the Australian position is this: One, Australia is actively depleting the resources in dispute, including the Buffalo, Laminaria and Corallina fields. And two, Australia refuses to have a neutral third party resolve our dispute. This suggests an uncertainty about the strength of Australia's legal case.

Building a sound economic base and long term stability: The proposed Timor-Leste Petroleum Fund

The Timor-Leste Government is currently building on the principles implemented by the United Nations in building a framework for managing the modest amount of revenues that have begun to come to us from the Timor Sea.

In designing this framework, we are seeking to implement the principle of inter-generational equity. It is the aim of my government to preserve for the next generation the wealth from our oil and gas resources.
Timor-Leste has in place an interim petroleum revenue management policy of saving the royalties from the Joint Petroleum Development Area. All payments received are also published annually and accounted for in the national budget for full transparency.

However, we are now looking to introduce a permanent petroleum fund for the management of our oil and gas wealth. It will be based on the model adopted by Norway with additional safeguards. We call this model "Norway-plus".

The key principle governing the management of this petroleum fund will be that only the sustainable income from our petroleum wealth will be available for current expenditure. Sustainable income is the revenue roughly equivalent to the real interest rate on the estimated wealth that is both in the seabed and in the fund. This principle would mean that the fund would retain, on average, about half the petroleum revenue earned each year.

Revenue from the JPDA is expected to be very volatile over the next 20 years. In some years we will earn in the hundreds of millions, in others much less than that. As a result, in some years we will need to save nearly all of the revenue, while in others we will need to use most of it. The essential point is that, if we want to generate sufficient capital to earn income for future generations, we will need to save an average of 50 per cent of our revenue from the Timor Sea.

In designing this fund, the emphasis is very much on having capital available for the future. This means our investment strategy will be low risk, and the funds will be invested internationally. Government investment for our domestic needs will come from the National Budget.

This fund will be subjected to a full set of transparency and accountability measures. It will have oversight from a board of prominent citizens, which will be required to report to the National Parliament on how much revenue has been retained in the fund.I would now like to turn to the legal framework that Timor-Leste is establishing to facilitate investment in, and development of, its resources.

Establishing a legal framework to develop our petroleum resources

Regulatory regime:

The current petroleum regime in Timor-Leste is more complex than in most countries. This is unsatisfactory for my government and also for the industry. It reflects the fact that part of Timor-Leste's petroleum lies in an area that is subject to a provisional arrangement with Australia - that is the Timor Sea Treaty which established the Joint Petroleum Development Area, or JPDA.

Regulatory and fiscal regimes for both Timor-Leste's JPDA and non-JPDA areas are currently being drafted with technical assistance from experts from many countries, and from within the petroleum industry.

The working group has considered petroleum regimes in other countries, with a view to creating a petroleum regime for Timor-Leste that is internationally competitive, stable, transparent and fair. A key feature of the contractual arrangements will be a "pro-forma" production sharing contract (PSC) for the JPDA, and potentially for outside the JPDA.

The regime for awarding petroleum development rights in both the JPDA and non-JPDA areas will be based on competition between companies. It is contemplated that such rights will be awarded after a competitive bidding process. The Ministry of Development and Environment of the Timor-Leste Government, or the Timor Sea Designated Authority will be obligated to consider all bids. If the Ministry or the Designated Authority wished to grant rights to explore for or exploit petroleum without a bidding process, it would have to publish an explanation for doing so.

The Ministry and the Designated Authority may grant rights only to companies that have the financial capability, and technical knowledge and ability, to carry out the authorized activities concerned. In choosing between companies so qualified, they are mandated to consider required proposals relating to the training and preferential employment of Timor-Leste nationals, and to the use of Timor-Leste goods and services, as well as relating to the protection of the marine environment, and occupational health and safety.

Petroleum companies will not be required to pay "signing bonuses" to the Ministry or the Designated Authority when they receive authorizations. The draft laws and contracts include various measures - including provision for auditing and arbitration of disputes - that are designed to ensure that Timor-Leste's petroleum is exploited in a fair and transparent manner.

The Ministry and the Designated Authority will be required to exercise their powers and discharge their functions so as to promote the sustainable and long-term economic development of Timor-Leste (and Australia, in the case of the Designated Authority). They must also give due consideration to concerns of petroleum companies and other interested parties. The Timor-Leste regulatory law sets out ethical obligations and limitations (for example, regarding the disclosure of information, conflict of interest, corrupt practices, etc.) with respect to Government officials so as to ensure that they exercise their functions in a fair and transparent manner.

Both the JPDA and non-JPDA regimes contemplate petroleum companies making their books and accounts available for auditing.

It is expected that the working group will finalize these draft laws in the coming months. They will then be made available for public comment - including, importantly, from the petroleum industry - and then submitted to the Council of Ministers and Parliament thereafter. We expect these laws to be passed by the end of the year.

While these laws are being drafted, an interim regime applies to petroleum exploration and development in the JPDA.

But there has also been a tremendous amount of interest expressed by the petroleum industry in exploring for and developing Timor-Leste's resources in areas outside the JPDA. Therefore, I am pleased to announce that the Timor-Leste Government will soon open bidding for pre-exploration seismic data acquisition rights in Timor-Leste in onshore and some of our offshore areas.

Pre-exploration data acquisition rights:

Recent petroleum geology expert surveys, as well as previously existing seismic survey data, have been acquired by our government and analyzed by technical advisers working within our Ministry of Development and Environment.

Their assessment is that there is potential for the existence of highly prospective hydrocarbon deposits in some areas both onshore and offshore Timor-Leste. We have therefore decided to grant rights to conduct seismic data acquisition surveys in both onshore, and in offshore areas. Although the planned survey areas are large, they will not cover all of the area in which Timor-Leste has exclusive rights to resources under international law.

The proposed seismic data acquisition surveys will be on a commercial basis at the risk and cost of the contractor. The contractor or contractors will be selected on a competitive tender basis. The terms and conditions for the areas proposed to be advertised are now practically finalized. In preparing the survey Terms of Reference, we have sought and obtained the advice of a number of leading international consultants and contractors in the industry. Within weeks the terms of reference for this bidding round, together with an information package, will be available to the seismic contracting industry.

The offshore areas will be the first to be advertised for bids, whilst the onshore area will be advertised later due to the need for additional technical advice with respect to the terms and conditions. We still hope, however, to launch the bidding rounds for both onshore and offshore at the same time and are aiming towards that.

Naturally, my Government takes into account the fact that Australia has made jurisdictional claims in some areas of the Timor Sea. We will fully observe international law in relation to all petroleum activities, including the obligation to exercise restraint in any areas where Australia's claims may conflict with Timor-Leste's. However, we are determined to begin acquiring further knowledge of the prospects of our resources.

I look forward to hearing the perspective of the petroleum industry on this pre-exploration bidding round. Already, interest is mounting from within the industry. As I have already said, this is just the start of acquiring greater knowledge of our resources in the Timor Sea, as well as on our onshore territory. The Designated Authority also has plans to undertake further and more thorough seismic work in the vacant areas of the JPDA, with a view to ultimately attracting more exploration and development in the area.
I have said many times that the petroleum resources in the Timor Sea are critical to our future as a nation. We regard it as extremely important to approach the exploitation of these resources in a responsible and sustainable way. Before we can do that we have the responsibility to put in place the legal and commercial framework to acquire further information relating to the existence and quantity of such resources. That way we can develop a petroleum industry in the model I outlined earlier to create a sustainable and economically independent future for our young nation.

We strive to do this because we have an obligation to this generation and future generations of Timorese to utilize the resources that belong to our nation and our people wisely. In doing so, our aim is to eradicate poverty, develop our people's potential and create a sustainable future for them.
I hope that many of you attending this conference will take the opportunity to meet with our representatives here at SEAAOC to find out more about these opportunities in Timor-Leste. We look forward to working with industry in our efforts to achieve a prosperous Timor-Leste.

Statement on oil and gas development in Timor-Leste, 29 August 2004

The Government of Timor-Leste (East Timor) is on track to promulgate by Christmas a regime for the development of petroleum resources in Timor-Leste, said Prime Minister of Timor-Leste Mari? Alkatiri.

Prime Minister Alkatri was speaking after a three day public consultation meeting last week in Dili (August 23-25) on laws and model contracts that will make up this regime. This will be followed by consultation meetings in district centres over a two week period, and complemented by any written submissions received on the regime, including from industry.

"The comments provided at the consultation meeting will be carefully considered and will help the Government to refine the draft set of laws. The feedback we received was very positive and I believe we will be able to meet our deadline of having the regime in place by Christmas."

"The proposed regime is a competitive, transparent and stable model for the development of oil and gas resources."

What is before the public is a revised regime for the offshore area jointly managed with the Australian Government, as well as a new regime for other Timor-Leste areas, both onshore and offshore.

"Once the new regime is in place, Timor-Leste hopes to begin exploration and development as soon as possible."

"In this regard, I warmly welcome Australian Foreign Minister Downer's willingness to resolve our maritime boundary dispute expeditiously by looking at creative solutions. I have called for this over many months."

Under current interim arrangements, Timor-Leste is forecast to earn approximately US$4 billion from known reserves. Under a permanent maritime boundary set according to international law, Timor-Leste would be entitled to three times this amount.

"Mr Downer's comments at the August 11 press conference marked an important recognition of Timor-Leste's just claim to these revenues."

"I am confident that a solution can be reached that reflects Timor-Leste's rights in the Timor Sea under international law. I hope that the September 20 talks in Canberra will be a constructive, productive and intensive session that will work towards a fair and equitable sharing of the Timor Sea resources."

"In addition to the world-class legal and fiscal regime that Timor-Leste has articulated, Timor-Leste is committed to establishing international stability and continuity for the exploitation of Timor Sea oil and gas resources. This is in the interest of all parties - the petroleum industry and Timor-Leste, and also our friend and neighbour Australia."

Timor-Leste Prime Minister Welcomes First Successful Seismic Tender, 7 September 2004

Timor-Leste (East Timor) Prime Minister Mari Alkatiri today welcomed the successful result of the new nation's first tender for offshore seismic and geophysical data acquisition rights.

The highly competitive bid jointly advanced by BGP (owned by PetroChina) and GGS (Geo Global Services, a Norwegian-based company) puts Timor-Leste on a sound footing in its bid to develop its own petroleum resources.

"I am very pleased that the Timor-Leste Government received significant interest from seismic companies. The bid by BGP-GGS is outstanding in terms of its financial offer, commitment to local training, and the amount of seismic work to be undertaken," the Prime Minister said.

The acquisition of data is part of a plan to subsequently invite tenders for Timor-Leste's first exploration license round in the first quarter of 2005. Timor-Leste is in the process of articulating a regulatory and fiscal regime for petroleum activities. The draft documents that will make up this regime are currently available for public comment. It is the aim that it be in place by the end of 2004.

This has been Timor-Leste's first sovereign licensing round. Timor-Leste, as a signatory to the Timor Sea Treaty, is already active in the joint governance of petroleum development in certain areas of the Timor Sea administrated by a joint Timor-Leste-Australia authority, the Timor Sea Designated Authority.
The seismic round was announced by the Prime Minister at the SEAAOC conference in Darwin on June 7. Bid tender packages were made available on June 15, and bids were made by July15.

A committee of Timor-Leste government officials and international advisers reviewed the bids against a set of objective criteria derived from the Terms of Reference. While all the bids were competitive, the joint BGP-GGS bid, offered a substantially higher return to the government, a more comprehensive training package and a more extensive work program.

The data collected by BGP-GGS remains the property of the state of Timor-Leste but the rights to use this data will be available for purchase by exploration companies.

Timor-Leste government launches public consultation on Petroleum Fund, 18 October

The Timor-Leste Government is today starting a period of public consultation on key issues related to the establishment of a Petroleum Fund for Timor-Leste. A discussion paper has been prepared to provide a basis for the public debate.

Prime Minister Mari Alkatiri said today: "Our aim is that the Petroleum Fund will be a tool that can contribute to the wise management of Timor-Leste's petroleum resources, to the benefit of both current and future generations".

"Experiences from other countries show that petroleum wealth can easily become a curse instead of a blessing. In order for Timor-Leste to ensure the petroleum resources are well managed, it is important that people are well informed and that we can establish a strategy with as broad an agreement as possible."

The public consultation discussions will focus on the establishment of a Petroleum Fund as a savings instrument. The proposed Petroleum Fund builds on Norway's successful experiences, but adds additional transparency and information features. It is currently referred to as the "Norway Plus" model.

Discussions will also address the related, but separate, question of what is the preferred savings policy. The Government has adopted a savings policy that keeps constant the real value of the petroleum wealth. Over the medium term, this policy would allow for an increase in government expenditures from today's levels.

Prime Minister Alkatiri said today: "Increased spending should be used wisely to invest in key government services and infrastructure, which can deliver stronger economic growth and contribute to poverty reduction. This policy would at the same time ensure that sufficient financial savings are deposited in the Petroleum Fund so that in later years we are able to maintain the same level of expenditures."

Government officials will hold public consultations in a number of districts including the capital Dili, in the coming weeks. Prime Minister Alkatiri further said "we encourage all the people of Timor-Leste and interested parties to participate in these discussions on the Petroleum Fund to provide constructive comments on issues raised."

On the basis of this public consultation, the Timor-Leste Government intends to put forward a draft law on the Petroleum Fund for public consultation early next year. Subject to the approval by Parliament and promulgation by the President, the Petroleum Fund can then be operational from 1 July 2005, which is the start of the 2005-2006 fiscal year.

Comments related to the issues raised in the discussion paper should be submitted by 30 November 2004 to the Ministry of Planning and Finance.

For questions regarding the Petroleum Fund and the public consultation, please contact Mr Cristino Gusmao, Macroeconomics Unit, Ministry of Planning and Finance (cgusmao@mopf.gov.tp) or tel +670 723 0127).





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