Veronica Brooks – 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.