This report primarily discussed on-shore mineral and petroleum (hydrocarbon) resources belong to East Timor. It was distributed in printed form at the Conference on Mineral and Petroleum Resources for East Timor held in Dili on 5-7 March 2003. Other conference papers are also on the OilWeb CD-ROM.

UNITED NATIONS
Economic and Social Commission for Asia and the Pacific (UNESCAP)
UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP)

 Natural and Mineral Resources Inventory, Policy and Development Strategy
 East Timor

Project findings and recommendations

EXECUTIVE SUMMARY

In 1999, the United Nations conducted a referendum which led to the establishment of the United Nations Transitional Administration for two years and culminated in the birth of the independent nation of East Timor on 20 May 2002 with the Declaration of Independence.

This sovereign state now faces the daunting task of economic and social development of its people. East Timor is predominantly an agrarian society with about 76 per cent of the people living in rural areas. The absolute poverty line for the country was estimated to be US$16.50 per person per month (or US$0.55 per day) and remains as the poorest nation in Asia. In order to alleviate the people from absolute poverty, the Government has given the highest priority to promoting rapid economic growth as elaborated in the National Development Plan (2002-2006).

The assessment and development of mineral resources and onshore oil and gas prospects were identified as major engines for economic growth in early 2001 by the United Nations Transitional Administration for East Timor (UNTAET) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) was requested to field a mission to assist in the formulation of an integrated development policy for assessment of such non-renewable resources for economic progress. This mission, fielded in April/May 2001, indicated that there is good potential for base metals (copper, lead, zinc and nickel) as well as precious metals (gold and silver), industrial minerals (limestone, clays, ornamental stone etc.) and onshore oil and gas and recommended that an inventory of minerals and the locations of oil and gas seepages be compiled on a priority basis. Further, to attract foreign direct investment, the mission  recommended the formulation of a detailed mineral exploration programme covering specific target areas, institution-building both in the public and private sector and drafting of a mining law and regulations that would also include environmental considerations for sustainable mineral resource development.

As a follow-up to the above recommendations, UNDP in consultation with the Office of the Secretary of State for Natural and Mineral Resources and the Division of Environment of the Ministry of Economic Affairs and Planning of ETPA, requested UNESCAP to formulate a SPPD Project titled “East Timor Natural and Mineral Resources Inventory, Policy and Development Strategy”. Accordingly, UNESCAP fielded a mission to Dili in February 2002 for the SPPD project formulation which was subsequently approved by the UNDP – PAC, signed and endorsed by UNDP and UNESCAP.

The project activities which commenced in April 2002 had basically a three-pronged approach, namely:

(a) compilation of a mineral and onshore oil and gas database and its appraisal

(b) a strategy for exploration and utilization of mineral resources, oil and gas with institutional and capacity-building components and

(c) basic legal regulatory and environmental framework to promote FDI. The above tasks were carried out by three international consultants and a national consultant fielded by UNESCAP during the period April-June 2002. The professional staff of UNESCAP assisted and coordinated all project activities.

This report includes fundings and recommendations of these consultants, among others:

Excerpt: East Timor mineral-hydrocarbon potential (page 104)

We have already noted that the geology of East Timor is favorable for the occurrence of a wide variety of minerals. The hydrocarbon potential is not as well known. Based on current data it is possible to state that, unquestionably, hydrocarbons do occur onland in East Timor. These onshore and near shore resources have been brought into focus as a potential source of additional future revenue to supplement revenue to be derived from the sale of offshore gas and to provide raw materials necessary to rebuild the country. However, the funds that would be derived from the sale of offshore gas and oil would not be forthcoming for at least four years (2006). Therefore, the development of the present minerals and hydrocarbon database is essential to support the development of East Timor’s economy and to attract investment in the mineral and hydrocarbon sectors. The building materials industry is especially dependent on the availability of low cost local materials. Even small local oil seeps provide a source of energy in some rural areas. This section reviews the status of hydrocarbon development in East Timor.

Excerpt from report's Executive Summary

The most attractive potential of East Timor is in base metals, mainly copper, and associated gold and silver. This potential is in the proven occurrence of so-called Cyprus type volcanogenic massive sulfides related to ophiolite sequences. While a rather spectacular outcrop of this style of mineralization was observed in just one instance, geological reasoning and extrapolation allow for the conclusion that these commodities will be found in other locations as these ophiolite sequences occur widespread in East Timor.
Chromite and vein type gold represent other exploration targets in which the private sector will be interested.
Possible interest will be in the clay mineral potential, in phosphorites as well as in marble and other stone resources. Some of these resources may represent targets for domestic investment.

Excerpt from report's Executive Summary

Subsequent to theNational Mineral Policy Workshop in Dili on 05-06 June 2002, research was focused on the mineral development implications related to the recently published National Development Plan. Two basic premises were established by workshop participants that framed the priority tasks of this mission:

1. There are numerous known mineral commodities in East Timor that could play an important role in attracting new investment, generating employment, improving local infrastructure and contributing revenues to Government.

2. The legislation and regulatory framework necessary to properly activate the development of onshore mineral resources is much more easily established than that necessary for the more complex onshore/offshore petroleum resources.

The first step in addressing these premises was to produce a first draft Mines and Minerals Management Law (MMML) and an accompanying explanatory Mineral Policy Proposal. The draft MMML was designed to enshrine the 21^st century principles of economic, environmental and social sustainability in a nationally and internationally attractive legal package.

As a matter of urgency, it is anticipated that the major legislation, regulations and policy drafts prepared under the project would be submitted to the respective law and policy-making bodies shortly after the Tripartite Review Meeting of the project between the Government, UNDP and UNESCAP tentatively scheduled for September 2002 in Dili. It is also proposed that the mineral database and the strategy for exploration and development of minerals, onshore oil and gas be widely disseminated among the international mining and oil and gas companies in order to catalyze FDI. It is further recommended that these reports be presented by the Government to bilateral and multilateral donor agencies for consideration for funding to establish institutional frameworks and technical assistance in the development of the mineral and onshore oil and gas sectors in East Timor.

Prepared for the Government of the Democratic Republic of East Timor by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) acting as the executing agency for the United Nations Development Programme (UNDP) Support Services for Policy and Programme Development (SPPD).  

Project TIM/1/022,  September 2002   Bangkok

Abridged and slightly edited for OilWeb.

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
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P.O. Box 340, Dili, Timor-Leste
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