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Timor-Leste First Licensing Round, 2005-6

In 2004, Timor-Leste commissioned a seismic survey of the potential petroleum reserves in the uncontested part of the Timor Sea, which was done in 2005.

Also in 2004-5, the government and parliament enacted a petroleum regime which defines how petroleum companies relate to the country.

As these were being developed, RDTL began to publicize the imminent round of bidding for contracts in the petroleum industry trade press. The round was initially planed for 2005, but later delayed until early 2006. The round was officially announced in August 2005, and the RDTL government and bi-national Timor Sea Designated Authority jointly mounted a road show, traveling to Singapore, London, Calgary and Houston to interest oil companies. The information provided at the shows included a TSDA release package, a speech by Prime Minister Alkatiri and information from the RDTL government.

RDTL's government website includes a general introduction to this process, and numerous references.

RDTL published an Initial Tender Protocol and Bid Round Regulations in October 2005, with a Final Tender Protocol following in January 2006.

In November 2005, Timor-Leste hosted a Technical Conference in Dili for companies interested in bidding for Timor-Leste's offshore oil reserves. Presentations given at the conference are included on this OilWeb CD.

Below are a series of early media articles about the licensing round, including:

In early 2006, Timor-Leste offered eleven blocks for companies to bid, according to this procedure, with this bidding envelope form.

On 20 April 2006, RDTL announced that five companies had submitted bids for six of the eleven blocks (pink on map above) offered. The companies are ENI S.P.A (Italy), Reliance Industries Limited (India), and a consortium led by Petronas Carigati (Malaysia) which includes Petróleo Brasileiro (Petrobras, Brazil) and GALP Exploração e Produção Petrolífera (Portugal).

A commission evaluated the bids, and on 12 May recommended that contracts be awarded to Eni for areas A, B, C, E and H, and to Reliance for area K. On 16 June, the RDTL Government released the Evaluation Report explaining how the decisions were made.

On 3 November 2006, the government announced that it had signed PSCs for five contract areas with Eni, and released the texts, accessible from here.

Several media articles about the signing are below:

On 19 December 2006, the RDTL Petroleum Ministry granted permission for Eni to invite companies to bid for seismic exploration without a full public tender process.

During the same period, the Timor Sea Designated Authority (TSDA) conducted a bidding round for unlicensed areas of the Joint Development Area (green on map above).  Follow this link for more information about the TSDA round.

During 2008, Timor-Leste began discussing a licensing round to be held during 2009 or 2010.

Timor-Leste prepares for licensing round

Rick Wilkinson, Oil and Gas Journal, Feb. 8, 2005

MELBOURNE -- The government of Timor-Leste is finalizing details for a new petroleum fiscal regime this month before an onshore and offshore licensing round scheduled during April and June.

The regime will be based on a production-sharing contract system benchmarked against similar arrangements in other countries within Southeast Asia to ensure it will be competitive.

At the same time, Timor-Leste's Energy and Minerals Directorate is preparing a geological and geophysical data package covering areas to be licensed in what will be the country's first offer of exploration rights in 3 decades.

Late last year, a joint venture of China's PetroChina and Norway's Global Geo Services ASA received a contract to acquire about 6,400 km of 2D seismic data in offshore areas to the south of Timor that are clearly not in dispute with Australia. The data will be available for purchase by companies that wish to participate in the new licensing round.

Only one offshore well has been drilled in the region—Mola-1 about 3 km off the south coast. It found noncommercial gas in Pliocene-age reservoirs in 1975.

Permits will also be offered in the country's onshore region, particularly the southern half where numerous oil and gas seeps have been well documented since the early 1900s. There has been no onshore drilling in the country since the Indonesian annexation of East Timor in 1975.

Prior to that, 22 wells were drilled by Timor Oil Ltd., Sydney, during 1957-74. Numerous oil and gas shows were noted during this program, and two wells, Matai-1 and Cota Taci-1, both on the southwest coast near the border with West Timor, flowed at 160 b/d and 200 b/d, respectively. This was not enough to sustain commercial production.

Timor-Leste also is planning to establish a national oil company modeled on the Brazilian state oil firm Petroleo Brasileiro SA to participate in upstream and downstream operations and a National Petroleum Fund to manage its potential oil and gas revenues.

Officials from the Energy and Minerals Directorate plan visits to Asia, Europe, and the US to make presentations on the licensing round.

See also East Timor Moves to Open Up Oil and Gas Fields
by Rowan Callick, Australian Financial Review, February 7, 2005

Timor on Track to Establish Oil, Gas Industry

From FWN Select Tuesday, February 08, 2005

CANBERRA -- East Timor's bid to establish a viable oil and gas exploration industry has received robust early interest from multinational petroleum companies, according to the nation's top energy official.

Indeed, Jose Fernandez Teixeira, East Timor's secretary of state for tourism, environment and investment, expects healthy competition in the nation's maiden exploration licensing round scheduled for June.

The impoverished nation will soon have a much clearer idea of how oil and gas rich it really is, with a seismic survey being conducted by China National Petroleum Corp. and Norway's Geo Global Services to be completed within two weeks.

"We hope to have the first bid round announced in about June. That is our timetable," Teixeira said in an interview.

"That's when we will seek expressions of interest and give the companies a chance to have a look at the material," he said, though added it is unclear how long this phase will take.

"We have quite a lot of serious interest being expressed already. There's quite a multinational representation there. It will be competitive. I think we will be able to attract the investment we need to undertake the exploration," said Teixeira.

But first the East Timorese parliament must pass legislation that finalizes the legal framework for an oil and gas industry and that approval is expected this month.

The new petroleum law allows for production sharing contracts that are split 50-50 between East Timor and exploration companies, in addition to a number of financial and tax incentives.

Also, government officials will embark on an international roadshow during April or May that will include stops in Houston, London, Tokyo, Singapore and possibly Perth.

"These (cities) are at the heart of the oil and gas industry. Perth is coming on to the agenda very quickly" in light of interest from Australian companies, Teixeira said.

Nation Doesn't Want To Rely On Oil Funds

The 2005 licensing round will be made up of offshore, onshore and nearshore acreage in East Timor's territory, with Dili proposing to pour the proceeds into a petroleum fund to spur economic development and alleviate widespread poverty.

"It will ensure the sustainable use of those funds so we don't become an oil dependent country that produces nothing else," Teixeira said.

"This is why in our maritime dispute with Australia our main focus is on the sharing of the resources...not just the revenue.

"It's not about aid, it's about having the resources to utilize them, to create industries, to have as a launching pad for the development of other sectors," he said.

"These resources present an opportunity to establish the foundations for the future."

Still, Teixeira concedes there is scant scientific data to support the country's goal of becoming an oil and gas province, apart from what is known about the Joint Petroleum Development Area in the Timor Sea that East Timor shares with Australia.

"(But) there is a sufficient history and there is sufficient data held out there to arouse interest that exploration should take place," he said.

"We do know from previous exploration that there is a possibility of some hydrocarbon deposits."

"What we know of the geology is it is very similar to geology elsewhere in the Timor Sea where there are deposits and reserves. That at least warrants us taking responsibility to begin the process of investigating and evaluating those resources," he said.

Dili has said the size of the exploration blocks to be offered will be determined after the seismic survey is finished, while between two and four blocks in the Joint Petroleum Development Area also will be offered this year.

East Timor oil acreage offering delayed to 2006

Reuters, 7 June 2005

DARWIN: Tiny East Timor expects to open bidding for its maiden oil and gas blocks in the first quarter of next year, a senior government official said yesterday, much later than expected.

East Timor, one of Asia's poorest nations and which has vowed to use oil and gas money to help ease poverty, said a string of companies including Malaysia's Petronas and Australia's biggest independent oil and gas producer Woodside Petroleum Ltd had expressed informal interest.

"We are offering (fiscal) terms to investors which are attractive. The regime is designed to be increasingly flexible and adaptive," Manuel de Lemos, acting director Timor Sea Office, Office of the Prime Minister, told an oil and gas conference in Darwin, northern Australia.

He said the country could award exploration licences by the second quarter.

He did not say why the offering would occur in 2006 instead of this year, as officials had told Reuters in February.

De Lemos said he hoped all legislation governing oil and gas exploration would go before the young country's parliament by the middle of the month with approval expected by mid-July. The new laws were previously expected to have been passed late last year.

He said Norway's Statoil, Kuwait's international upstream investment firm Kufpec and PetroChina had also expressed interest.

"We have dozens of oil seeps in Timor Leste...the area is almost identical to what is found in the North West Shelf," Australia's biggest resource development, he said.

There was little exploration of East Timor's hydrocarbon potential during Indonesia's 24-year military rule, which ended in 2002, but several large gas fields have been found in the sea that separates East Timor and Australia.

Timor Launches Bidding Round for Petroleum Exploration

Canberra, 17 August 2005, Dow Jones Commodities News via Comtex

East Timor's Prime Minister Mari Alkatiri on Wednesday formally launched the nation's first bidding round for petroleum exploration rights in the Timor Sea.

"This bidding round marks the first time that petroleum companies will be able to acquire rights to explore for petroleum resources in areas under (East Timor's) jurisdiction," Alkatiri, also the impoverished nation's Minister for Natural Resources, Minerals and Energy Policy, said in a statement.

The launch follows the recent parliamentary approval of a legal framework for the development of East Timor's onshore and offshore oil and gas resources, and the long-term management of its petroleum revenues.

"In this bidding round we are offering petroleum companies access to frontier opportunities while working with a government that has a proven track record in administering large-scale petroleum development," Alkatiri said.

The bidding round follows the first comprehensive seismic survey of the relevant areas.

Alkatiri noted the results of the 6,600-kilometer survey and other relevant geological data are now available to the petroleum industry.

Some of the findings will also be presented during an international roadshow to be held in September in Singapore, London, Calgary and Houston.

Alkatiri is scheduled to open the roadshow in Singapore on Sept. 2.

"Interpretation of the first independent 2D seismic survey is now nearing completion, and several undrilled potential prospects have been identified in the Timor-Leste offshore areas, between the Joint Petroleum Development Area (it shares with Australia) and the southern coastline of Timor-Leste," Alkatiri said.

The areas which will be available for licensing have a number of potential petroleum systems present, and are surrounded by significant petroleum discoveries and occurrences on all sides, he said.

"My government has been advised that the whole area looks attractive and appears to be a prospective hydrocarbon province," said Alkatiri, pledging the bidding round will be a "competitive, transparent and accountable" process.

Following the prime minister's official opening of the roadshow in Singapore, a government delegation and a team from the Timor Sea Designated Authority will make presentations in London on Sept. 6, Calgary on Sept. 9, and Houston on Sept. 13.

The authority is also releasing new acreage in the Joint Petroleum Development Area in the Timor Sea, which is managed jointly with the Australian government.

Alkatiri said the deadline for bids for the East Timor round is the end of the first quarter 2006, with awards to be made in the second quarter.

East Timor originally hoped to host a roadshow for its maiden exploration licensing round earlier this year.

However, the promotion was delayed to give the country's parliament time to pass legislation that finalizes the legal framework for an oil and gas industry.

Eni Signs Five Exploration Contracts in East Timor

DOW JONES NEWSWIRE, November 7, 2006 5:27 a.m.

ROME (Dow Jones)--Eni SpA (E), Italy's biggest oil and natural gas company by sales, said Tuesday it signed five offshore oil and natural gas production sharing contracts with the government of East Timor after winning the country's first international acreage tender in May.

Eni will hold 100% of the licenses, which cover more than 12,000 square meters off the southern coast of East Timor, and must drill two wells in the first three years of activity.

Profits from these areas are to be split 60%-40% between Eni and the government, with Eni also paying a 5% royalty fee to the government.

Eni aims to expand its operations in the Pacific area, where it currently holds a 12% interest in Australia's offshore Bayu Undan field as well as in the Darwin liquefied natural gas plant, which has a yearly capacity of 3.5 million tons.

-By Liam Moloney, Dow Jones Newswires; +39 06678 2543;

Reliance inks oil block deal with Timor-Leste

Business Standard (India) Web Bureau / Mumbai November 17, 2006

Reliance Industries has signed a production sharing contract (PSC) with the Timor-Leste government for the offshore contract area K in the country's capital Dili.

According to an official release issued by the company to the BSE today, Atul Chandra, president (international operations) of RIL, signed the contract with the Timor Leste minister of natural resources, minerals & energy policy Jose A Fernandes Teixeira, on November 16, 2006.

In January 2006, the government of Timor Leste had invited bids for 11 offshore exploration blocks in shallow to ultra deep waters. The country announced the awards on May 23, 2006. Of the 11 blocks offered under the licensing round, six blocks have been awarded, of which the company has won 1 block. The area of the awarded block K is 2,384 sq. km.

The company will have majority interest and operator-ship in the block, the release said.

The acreage offered lies in the proven petroleum province of Australian North West Shelf and is adjacent to the Timor Sea, which is a joint petroleum development area between Timor Leste and Australia. This region contains world class discoveries like Bayu - Undan (commenced production in 2004) and Greater Sunrise, the release added.

[link to additional news reports on Reliance in Timor-Leste]

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
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