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Timor Leste's energy ambitions could make it the 'next Guyana'

Forbes - May 10, 2022

David Blackmon – One of the more interesting sessions presented at the recent Offshore Technology Conference (OTC) in Houston focused on the tiny Indian Ocean nation of Timor-Leste, featuring the President and CEO of Timor Gas & Petroleo (TIMOR GAP), E.P., Mr. Antonio de Sousa. Home to just 1.3 million people, Timor-Leste occupies the eastern half of an island shared by West Timor, which is part of Indonesia.

Upon achieving its national independence from Indonesia in 1999, Timor-Leste became immediately entangled in a territorial dispute involving ownership of what is called the "Gap" area, a region between its southern shores and the northwest coast of Australia. The matter was of sufficient significance and controversy that the United Nations agreed to replace Indonesia as a party to the negotiations. One driver of this, as Mr. de Sousa chronicled in his discussion, is a significant portion of those waters that delineate the Greater Sunrise Field, an area of high natural gas potential that was initially discovered in 1974.

A 2007 graduate of the Norwegian University of Science and Technology, Mr. de Sousa has the distinction of being the first person in Timor-Leste's history to obtain a master's degree in petroleum reservoir engineering. He assumed his role at TIMOR GAP at a crucial time in mid-2020, as the national government entered into negotiations on the Greater Sunrise Special Regime Legal Framework between the governments of Timor-Leste an Australia.

An outcome of these negotiations has been the formation of a joint venture that will govern the development of the Greater Sunrise Field's resources, which are currently estimated to have recoverable reserves of 5.1 Trillion Cubic Feet (TCF) of natural gas and 226 million barrels of condensate. TIMOR GAP owns a 56.56% interest in that joint venture, with Australia-based Woodside Energy owning 33.44% and serving as operator. The remaining 10% are owned by Japan-based Osaka Gas.

The magnitude of the Greater Sunrise Field's resource alone could represent a paradigm shift for the citizens of Timor-Leste given the percentage of the reserves owned by the country's government, a part of which came as the result of 2018 acquisitions from Shell and ConocoPhillips COP. In an interview following his presentation, Mr. de Sousa stated that the government had created a National Investment Endowment Fund that is based on the model employed by Norway for many years related to its own oil and gas revenues sourced from its large North Sea developments.

The country's plans also go far beyond just producing and selling the natural gas and condensate. Mr. de Sousa detailed TIMOR GAP's plans to create an onshore Timor-Leste LNG export facility for part of the gas, as well as plans to use a large share of the gas that will be used to reduce emissions in the island's power generation. "Currently, we use heavy fuels (i.e., fuel oil) in our power plants," he stated during an interview. The company's website lists the combined generating capacity of the three plants involved as totaling 272 MWH, and says the Wartsilla engines used in them are capable of being converted to use natural gas.

Mr. de Sousa also described his company's commitment to environmental protection and the steps that will be taken to fulfill it. He also stated that the National Government has already developed a set of regulations related to natural gas flaring and that, among other things, the Joint Venture plans to integrate both solar and wind power into the provision of electricity for its operations. He then discussed plans for a carbon capture and storage project targeting another field called the Bayu-Undan, which is scheduled to be decommissioned soon. "The commitment by all parties to the (joint venture) agreement to protecting the environment is clear," he said.

Another key aspect of Timor-Leste's energy future is that the Greater Sunrise Field is far from the only area of significant oil and gas potential available to it. Mr. de Sousa said that TIMOR GAP is currently conducting seismic surveys and evaluations in several other areas, both offshore and onshore, that they believe have potential for future natural gas and liquids development.

All this potential had attendees at OTC referring to Timor-Leste as the next Guyana, a reference to the small South American country whose energy and economic future has been completely transformed by the massive oil discovery by ExxonMobil XOM and its own joint venture partners in the offshore Stabroek Block in recent years. Mr. de Sousa, his team at TIMOR GAP and their partners have a huge set of challenges ahead of them if they are to achieve a similar level of success, but the facts surrounding the Greater Sunrise Field certainly justify a high level of excitement and optimism for the future.

Source: https://www.forbes.com/sites/davidblackmon/2022/05/10/timor-lestes-energy-ambitions-could-make-it-the-next-guyana