Notes on a presentation by OilWatch to East Timorese NGOs and activists

With Esperanza Martinez (Acción Ecologica, Ecuador) and
Hemantha Withenage (Environmental Foundation, Sri Lanka)

At NGO Forum, Dili, Timor Lorosa’e, 29 May 2002

Hosted and organized by La’o Hamutuk

An edited version of this article is in the July 2002 La’o Hamutuk Bulletin.

Hemantha: I an a chemist, and I work with the Environmental Foundation in Sri Lanka, a local NGO which has been involved in litigation on environmental issues since 1981. We deal with deforestation and other issues resulting from the opening of Sri Lanka to foreign investment since 1977, which has led to the taking of resources, poor pay for workers, waste, air pollution, etc. We give free legal advice in response to public complaints, of which we get 200-300 per year. If necessary, we go to court after gathering the evidence.

The process is often unworkable – there are no laws, one party has no money, there isn’t enough time. In such cases, mediation is preferable – negotiation between the two parties, which has proven very successful.

We also monitor the World Bank, ADB, IMF, JICA, etc. We joined with other international organizations to form the NGO Forum on the ADB, headquartered in Manila where the ADB headquarters is, and including people from all Asian developing countries. The IFIs have funded many destructive developments.

We also joined OilWatch – I am the OilWatch Asia coordinator. Environmental Foundation’s work has stopped many destructive projects – we saved 3,000 Ha. of mangroves that would have been used for shrimp farming. We also stopped a Freeport phosphate mine through court action. I am happy to share our experiences. Contact me at or at Environmental Foundation, 3 Campbell Terrace, Colombo 10 Sri Lanka.

Esperanza: My name is Esperanza Martinez and I am a biologist. I have worked with Acción Ecologica in Quito, Ecuador, South America, a national environmental organization which also serves as the Secretariat for the OilWatch Network. The OilWatch Network is a Southern Network – formed at a conference in Ecuador in 1996 by people from the South (developing countries) affected by oil and gas development. We include organizations from nearly all tropical forest countries which produce oil and gas, and we resist the negative effects of the oil industry.

I will talk about four topics:

  1. The process of oil exploitation
  2. The experiences of other countries with oil – especially poor, tropical countries like Timor Lorosa’e
  3. The economic, social, and environmental impacts of oil
  4. What we can do – both monitoring and resistance

The process of oil exploitation

Crude oil, gas, and “formation water” (very salty water) are found mixed together in the ground or under the sea. The process of finding and extracting them is the same on land and undersea, but it’s more difficult to observe or monitor what’s happening or being discarded under water. These are the steps:

1.                                                                                                                                                                                                                                          Exploration, using seismic activities. The companies explode dynamite to measure waves in the ground to identify where the oil is trapped

2.                                                                                                                                                                                                                                          Exploratory perforation (drilling) to determine the amount of oil. In the sea, this can be from platforms or ships. It creates waste sand and stones.

3.                                                                                                                                                                                                                                          If enough oil and gas is found, build wells.

4.                                                                                                                                                                                                                                          The materials from the well go through a “separation” process to separate oil, gas, and formation water. They use what they want – if oil, they burn off the gas; if gas, they discard the oil.

5.                                                                                                                                                                                                                                          Transport (by pipelines, tankers, trucks), then consumption. See map (we need to get this) showing where oil is consumed – primarily in the United States, Europe, and Japan. It’s mostly for cars, industry and electricity, except where electricity can be made from hydroelectric dams (such as South America).

Every step produces waste, which is easy to see on land (as in the photographs displayed), but less visible under the sea. See also the videos I am leaving with La’o Hamutuk.

The experiences of other countries with oil

The tropics are the richest part of the world, with much oil, but they are the poorest economically – just like Timor Lorosa’e. We have water, biodiversity and culture. The World Bank says our problem is extreme poverty – but we say the problem is the wealthy countries. This map shows where oil is found (drilling derricks).

Economic, social, and environmental impacts of oil

The more Oil, more War

Oil justifies and sustains major conflicts, especially where the United States military is involved, such as Colombia and Afghanistan. The red bombs on the map above show where oil-related conflicts are underway.

Recent civil wars in oil and mineral dependent states






Oil and gas

Angola (UNITA)



Angola (Cabinda)


Oil and gas



Oil and gas

Democratic Republic of Congo


Copper and diamonds

Indonesia (Aceh)


Oil and gas

Indonesia (West Papua)


Copper and gold


1974-75, 1985-92

Oil and gas



Iron ore and diamonds


1967-70, 1980-84

Oil and gas

Papua New Guinea


Copper and gold

Sierra Leone





Oil and gas


1986-87, 1990-94         

Oil and gas

In 1997, the governments of these countries spent an average of 12.5% of their budgets on the military. For every 5 percent rise in oil dependence, they spent an additional 1.6% of their budget on the military.

Oil comes with major environmental destruction

For each well on land, two hectares of forest is cut down.

Exploration and exploitation produces seismic shock and waste.

For every barrel extracted, at least one barrel is spilled.

Globally, burning fossil fuels adds CO2 to the atmosphere, causing climate change which leads to extreme weather, rising sea levels, and other negative effects.

These effects have consequences for both forest and marine animals. They also affects humans, creating cancer, leukemia, and miscarriages.

In countries with more oil, child mortality is higher, life expectancy at birth is lower (see graphs on slides).

The tropics are more ecologically fragile than other places (such as the USA) – so we need to take extra measures protect the forests and seas.

The more Oil, More Poverty

In 2001, Oxfam did a report on “Extractive Sectors and the Poor” which includes the following information.

“Oil dependence” is an indication of how much of the country’s income comes from oil and gas, to the exclusion of other sources. After the Timor Sea gas is in production, East Timor will be well over 50%.

Human Development Index (“HDI”) is a UNDP measure which combines income, health, and education. The Rank is how all countries compare, ranging from 1 (highest level of human development) to 174 (lowest).



Oil Dependence%

HDI Rank













Saudi Arabia         






Papua New Guinea        





















Côte d’lvoire        



The HDI rank is highest (worst) for the countries with the highest oil dependency: having oil does not mean the people of a country become rich. Oil and mineral dependence tend to reduce the rate of welfare and economic growth.

Oil brings debt – money is borrowed to pay for oil development, and then oil must be exploited to pay off the debt, continuing in a vicious circle.


Low Human Development Index

Low Economic Growth

High Under-five mortality

High Child malnutrition

Low Health Spending

Low Primary School Enrollment

Low Adult Literacy

Vulnerability to economic shocks

High Corruption


Lack of Government Effectiveness

Likelihood of Civil Wars

High Military Spending

Companies blackmail governments to get tax exemptions or other subsidies. One example is Maxus in Ecuador. Ecuador pays Maxus $72 for every barrel (by providing extensive services and compensation for international staff, including trips to dentists in the USA for their children). But Ecuador can only sell the oil for $15/barrel. After Maxus lost a case brought against them in anti-corruption court, the company sold its concession to YPF, which then sold it to Repsol. But they are still operating, with the support of the military.

Oil brings prostitution, AIDS, and cancer – due to highly paid foreign workers. It often disrupts indigenous cultures

Oil and gas often cause war (see map above), also Chiapas, Mexico. When Peru offered more favorable conditions for the oil companies than Ecuador, the companies provoked a war, and Peru now controls oil-bearing Amazon territory that was formerly Ecuador.

The Power of the Oil Companies

The corporations are often much more powerful than governments, especially big companies like Texaco or Shell and small countries like Ecuador and East Timor. The companies select the Ministers of Energy, write the governments’ environmental policies. The military forces work for the oil companies.

For example, Texaco produced 1.5 million barrels of oil in the Ecuadorian Amazon, and spilled much of it. Ecuador was paid $1.50 per barrel, and Texaco claims that it has no further obligations to the country. Compare these figures:

Exxon paid $15/barrel to compensate for the Exxon Valdez spill in Alaska, USA.

The indigenous Ecuadorians’ lawsuit against Texaco in US courts asks for $1.50/barrel spilled.

Texaco wants to pay Ecuador $0.15 per barrel spilled.

It is impossible for a small government to get a fair deal from huge multinational oil companies. By looking at their annual revenues, we can get an idea of just how huge they are.


Annual budget or income

Government of Australia

 $ 94,000,000,000

Government of Portugal

 $ 48,600,000,000

Government of Indonesia

 $ 26,000,000,000

Government of East Timor

 $ 77,000,000

United Nations (operations and peacekeeping worldwide)

 $ 4,410,000,000



Royal Dutch Shell

$ 135,211,000,000

Phillips Petroleum

$ 26,868,000,000


$ 1,460,000,000

Osaka Gas

$ 7,683,000,000

Woodside Australian Energy

$ 868,333,333

Oceanic Exploration (PetroTimor)

$ 3,410,915

In the table above, let your cursor rest over a line for an explanation of where the data came from.

Here's the same information, in graphic form:

If East Timor negotiates with Australia, East Timor will lose. The companies prefer Australia, with whom they have worked for a long time. Australian taxes are lower than those charged by East Timor. To the companies, East Timor looks too revolutionary. But there is a good chance the public in Australia and worldwide will be sympathetic to East Timor. Perhaps East Timor should demand a moratorium until the boundaries are clear.

Even in democracies like Ecuador, the oil companies are very powerful. Where there is a national oil company, as in our country, they use the military, using nationalism against the people.

Once oil exploitation starts, it’s more difficult to control. It is better to act now, and to insist on democracy. But even after exploitation is underway, monitoring and advocacy can help reduce its negative effects.

There is a strong international campaign to monitor and make demands of Shell in Nigeria. There’s a court case in the USA about human rights problems, and a shareholder campaign to change the company from inside. OilWatch will send a book about Shell, or see their website. OilWatch has a lot of information and experience with Shell, less with Phillips or Woodside.

What we can do – monitoring and resistance

The map shows where OilWatch members are – in many countries in Latin America, Africa and Asia. OilWatch has information about the real records of the oil companies – important because the companies’ propaganda always says they are the best environmentally and socially. The companies admit to problems in the past, but say they are better now. But in reality the problems persist and are repeated. We need to understand the consequences of both the routine and accidental practices of the oil industry. The videos I am leaving with La’o Hamutuk help show some of this information.

To understand and respond to the companies’ procedures, we need to monitor their activities. Monitoring is a tool – you also need to have a goal, such as empowerment, democracy, mobilization, or protecting the environment.

Among the tools to use in monitoring are:

  1. National law and the constitution, such as environmental rights.

Section (6)(f) of East Timor’s Constitution says The fundamental objectives of the State shall be: … to protect the environment and to preserve natural resources

Section 61 (Environment) of East Timor’s Constitution says

1.               Everyone has the right to a humane, healthy, and ecologically balanced environment and the duty to protect it and improve it for the benefit of the future generations.

2.     The State shall recognize the need to preserve and rationalize natural resources.

3.     The State should promote actions aimed at protecting the environment and safeguarding the sustainable development of the economy.

Section 96 authorizes the Parliament to define “the bases for a policy on environment protection and sustainable development”

  1. International law, including the “precalculatory principle” which says you don’t need evidence, just suspicion, to take action to protect the environment. [Question – do you know what this is called in English? I don’t think this is right.]
  2. Conventions, such as ILO Convention 169 (1989), which protects the rights of Indigenous Peoples
  3. Tools provided by the corporations, such as Environmental Impact Statements (EIS) and voluntary codes of conduct. These are weaker and have less power than the others.
  4. Soil and water sample testing, and observations of environmental effects. OilWatch has people who can help you learn how to do this.

The first two are the most important, as they are legally enforceable and can be used to achieve justice.

Part of monitoring is asking for documents, including:


Environmental Impact Assessments (EIA, done before starting project)

Environmental Management Plan (EMP)

Environmental Risk Assessment (ERA)

Internal monitoring information – documents, exchanges, accident reports, etc. These should be requested on an ongoing basis.

Environmental audits

Freedom of information laws in Australia may be helpful. Also, East Timor’s constitution Article 40 says “Every person has the right to freedom of speech and the right to inform and be informed impartially.” The E+P (Environment and Protection) Forum can be useful, as can the International Chamber of Commerce (ICC).

Money for not developing oil?

Over the past decade, the burning of fossil fuels has been proven to be disastrous for the global environment. Under the Climate Change Convention, there are economic incentives for both oil consumers and producers to reduce their use of fossil fuels, with special compensation for islands, which will be most affected by rising sea levels. Under this Convention, it may be possible for East Timor to be paid not to develop its oil and gas, or to delay the development. We need to get more information on this is new legal concept.

One month ago, Costa Rica declared itself “free of oil” – a moratorium, not developing its oil resources. The Country is demanding international compensation. This new market mechanism could be an opportunity for East Timor.

Contact or on the web (Spanish, English, French) at



OilWeb produced by La'o Hamutuk, the East Timor Institute for Reconstruction Monitoring and Analysis