East Timor Sets Up Fund for Nation's Oil, Natural Gas Royalties
East Timor Sets Up Fund for Nation's Oil, Natural Gas Royalties
Angela Macdonald-Smith
Bloomberg/Sydney
East Timor set up a petroleum fund for the management of the
three-year-old nation's revenue from crude oil and natural gas
production, in the expectation this will provide the country with
a stable flow of income.
The fund has started with a balance of almost A$250 million,
from petroleum royalties accumulated since 2000, and may increase
to more than A$5 billion over 20 years, Prime Minister Mari
Alkatiri said in a statement e-mailed from the capital, Dili. The
fund invests in low-risk U.S. government bonds, he said.
East Timor, or Timor-Leste, broke away from Indonesia,
Southeast Asia's biggest oil producer, in May 2002 after a 24-
year armed struggle. The country receives 90 percent of royalties
from oil and gas fields in an area jointly administered with
Australia that includes ConocoPhillips's A$1.8 billion Bayu-Undan
gas liquids project.
"Increased spending must be used wisely to invest in key
government services and infrastructure," Alkatiri said. The
government will "in time" consider a more diversified investment
policy, he said.
Royalty flows into the fund are set to increase once
ConocoPhillips starts producing natural gas from Bayu-Undan for
processing into liquefied natural gas at a $1 billion plant due
to start up in Darwin in the first quarter. Woodside Petroleum
Ltd., Australia's second-biggest oil and gas producer, said this
week it's considering options to develop the Jahal and Kuda Tasi
oil fields, which also lie in the jointly administered waters.
East Timor is seeking investment in oil and gas exploration in
its wholly administered waters and last month invited bids for
exploration licenses in its first auction of drilling rights.
Australia and East Timor are also close to an agreement on
dividing royalties from Woodside's stalled A$3.7 billion Sunrise
gas project, part of which lies in the jointly administered
waters, John Griffiths, director general of Australia's offshore
resources, said last week in Paris.