East Timor Prepares for First Licensing Round

East Timor
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Three years after the liberation and two years after the collaboration project with the Norwegian Petroleum Directorate (NPD) got underway, East Timor is now ready for its very first licensing round as an independent nation.

The area to be announced includes sea areas off the southern coast of the island nation in the Sea of Timor. According to Project Manager Geir Ytreland, there are great expectations linked to these areas.

"There are large gas/condensate fields south of the areas to be made available for licensing now. New acreage, proximity to large, proven reservoirs and a generally low geological risk are important sales arguments for the oil industry," says Ytreland.

Two-fold. Blocks will be announced in the area marked in pink. The capital of East Timor, Dili, is located on the northern coast of the island. The green ocean areas indicate the border between East Timor and Australia, the so-called Joint Petroleum Development Area, which is jointly administered by the two countries. Several fields are in production here, the largest of which is the ConocoPhillips-operated gas-condensate field Bayu-Undan.

Some companies have already indicated their interest in the upcoming licensing round. Ytreland hopes that many more will join them, and he believes that the resource potential should make the area attractive even for the largest, multi-national oil companies. Petroleum is not just found offshore. So-called oil-seeps, i.e. oil that has seeped up to the surface, are found in many locations on East Timor. Attempts have previously been made to produce some of these deposits. There is also interest on the part of the industry in exploring for oil and gas on the island itself.

"We are in the midst of a very exciting phase with lots of hard work. During the course of the year, we will be announcing areas for exploration both on land and off the coast of East Timor. This will be challenging, but we will manage it."

Ytreland is a geologist, with many years of international experience in the oil industry. He currently lives in the capital of East Timor, Dili, after being appointed Project Manager for the NPD's collaboration project with the petroleum administration on East Timor in the spring of 2004.

The goal of the project, for which planning commenced in early 2002 but which was not formally underway until 2003, is to provide assistance in building up and developing the petroleum administration in East Timor in such a way that the country will in the future be able to manage its petroleum resources on its own, with minimum assistance from foreign consultants and advisors.

The project will run for six years, and is financed by Norad. Like most other Norad undertakings related to petroleum assistance, the NPD is responsible for the project.

The NPD's Project Coordinator is Principal Engineer Erling Kvadsheim. On East Timor, Geir Ytreland has been employed as Project Manager, while political scientist Liv Marte Nordhaug has been employed as an advisor in the field of education and (good governance). Carlos Soares will facilitate the project.

The Norwegian Petroleum Directorate's main collaboration partner on East Timor is the Ministry of Development & Environment (MDE). Daily cooperation takes place with the Energy and Mineral Resources Directorate (EMRD), which is one of the units in the Ministry. The EMRD is divided into two divisions, one for mineral resources and one for petroleum. The new director of the petroleum division is the Timor native Amandio Gusmao.

"The project has developed quite a lot since we formally got started in the fall of 2003," says Erling Kvadsheim.

The level of knowledge within the petroleum administration has increased, and key parts of the framework are now in place, or are being completed. The cooperation between the various parts of the petroleum administration has also been strengthened.

Nevertheless, there are still a number of challenges, such as a continued need for increased technical and academic expertise in key petroleum disciplines. In addition come fundamental preconditions that must be in place. A bare necessities health care system, general poverty, high prices, and the fact that only 20 percent of the population has access to electricity, (and the power supply is extremely unreliable for the few who have it) are key challenges for East Timor, and for the Norwegian collaboration project.

High unemployment and widespread poverty characterise the East Timor of today, a scant three years after the country gained its independence in a bloody severance from 25 years of Indonesian occupation.

"The road to a better future depends on petroleum. The citizens of East Timor know this, therefore the expectations of quick results are enormous," Ytreland admits.

"We are under pressure, both from the industry and from the population on East Timor, to create activity and revenues. This project is of crucial importance to East Timor's future," says Ytreland.

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