Norwegian Oil For Development In Timorleste

6.15 T imor - L este Project:

Assistance in developing the management of the Petroleum Sector in Timor-Leste

Country facts:

Cooperating institution: Ministry of Natural Resources, Minerals and Energy Policy (MNRMEP) Goals and objectives: The Goal of the Project is to assist in developing the management of the petroleum sector in Timor-Leste, such that the public sector petroleum administration will be capable of managing the upstream petroleum activity without significant use of foreign advisors. This will be done by institutional cooperation between NPD and MNRMEP and associated institutions in Timor-Leste performing petroleum sector management functions such that the Norwegian experience of developing a public sector petroleum administration can benefit Timor-Leste, and such that NPD’s technical expertise and other Norwegian and international expertise can be utilised in developing a well-functioning petroleum administration. Project period: 2003 – 2008 Total budget: NOK 44.5 mill (USD 6.8 mill)

Programme: The programme consists of the following main elements: Education and training: Formal training at university and high-school level in petroleum related topics, short courses and workshops in selected topics and courses in basic and technical English. Advisers: Advisers on long-term assignments in the MNRMEP and associated institutions who will assist in developing the petroleum management, transfer knowledge to Timorese counterparts and carry out managerial and technical tasks. The advisors will primarily be in the fields of institutional development, law, policy, resource management and financial management. Data management: Develop petroleum data management systems, including provision of computer equipment and physical data storage facilities. Technical assistance: NPD/PSA will on an ad hoc basis provide technical assistance within resource management, data management and health, safety and environmental issues. Other Norwegian or international experts will be used as required. Workshops: Technical workshops in selected topics will be conducted throughout the project. Contact: MNRMEP: Mr. Amandio Gusmao, Director of Oil, Gas and Energy, [email protected] Mr. Roger White, Project Manager, [email protected] NPD: Mr. Erling Kvadsheim, Project Coordinator, [email protected]

Summary of the activities in 2006 The support to MNRMEP in 2006 included: • Implementation of the first bidding round in freeTimor-Leste and establishing procedures and plans for the National Directorate for Oil and Gas (DNPG) for administering the PSCs. • Establishing a capacity development plan for DNPG. • Continued the work of establishing a national database for the petroleum sector. • Drafting of rules and regulations. • Continued support to six scholarships for degree studies at universities in Australia and Norway. Four at University of Western Australia, one at University of Stavanger and one pending. • Small grants programme for support to Timorese students in Indonesia. 2 0 0 6 -2 0 07

Norwegian Petroleum Directorate O i l f o r d e v e l op m e n t

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Official Name: Democratic Republic of Timor-Leste Capital: Dili Chief of state: President Kay Rala Xanana Gusmao Head of Government: Prime Minister Jose Ramos-Horta Population: 1 062 777 (2006) Petroleum sector, key figures: No oil or gas production Production from Timor Sea JPDA (see below): Average oil production: 116 000 bbl/day (2005) Annual gas production: 142 mill m3 (2004) Organisation of the sector: Within sovereign Timor-Leste petroleum policy, execution and follow-up, including HSE-issues are the responsibility of the Ministry of Natural Resources, Minerals and Energy Policy. Environmental issues are the responsibility of Division of the Environment, which report directly to the government, but is expected to be transformed to a ministry. The Timor Sea Joint Petroleum Development Area (JPDA) is administered by the Timor Sea Designated Authority (TSDA) under a Treaty between Timor-Leste and Australia. Timor-Leste gets 90 per cent of the tax income and state petroleum share from the JPDA, Australia 10 per cent.

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farm in of LNG buyers into the Bayu-Undan field and the associated LNG prices used etc.

English training. Purchase of computer equipment. Assisting in preparation for implementation of the EITI principles. Supporting the Director and staff in DNPG in the various daily tasks Acting as adviser to the Ministry on an ad hoc basis on various energy issues. NPD project administration.

NPD has also administered advisers in the finance sector, in cooperation with the Norwegian Ministry of Finance and the Central Bank of Norway. The support has included: • Advice to the Banking and Payments Authority (BPA), including issues related to the operational management of the Petroleum Fund and in assessment of the strategic asset allocation of the Fund. • Macroeconomic advice to the Ministry of Planning and Finance, including investment policy for the petroleum fund, fiscal policies, budgeting issues and general petroleum revenue advice. • Participation in meetings in the Petroleum Fund Investment Advisory Board which are being held in Dili about 4 times per year. • Participating in the preparation of a validation process for EITI. • Advice to the Petroleum Tax Division (PDT), focusing on establishing the necessary capacity and knowledge in the Division to carry out its duties. • Giving technical support to the PTD, e.g. on a transfer pricing case towards a rig company, resulting in significant increased tax income to Timor-Leste, several cases regarding withholding tax, auditing the

The progress of the project was significantly influenced by a period of civil unrest and the associated security issues for both the MNRMEP staff and the international advisers. The activity level was low from end of May into August-September. In the beginning of that period several of the advisers left the country for security reasons and a number of the MNRMEP staff had to leave Dili, move into refuge camps or stay home from work. The advisers were all back by mid June. The Project has employed nine resident or part-time advisers in 2006: Project manager, project implementer, geological adviser, legal adviser, administration and education adviser, adviser to BPA, macroeconomic adviser, petroleum taxation adviser, petroleum fund investment adviser (part time). Several NPD experts and consultants has also worked on the project.

Plans 2007 The Project will continue its support to the MNRMEP throughout 2007 on a large number of the activities listed above. The progress will most likely be influenced also by the level of unrest in the Timorese society and by the outcome of the presidential and parliamentary elections to be conducted during 2007. The Project will also develop a proposal for an extension of the cooperation which most likely will be forwarded to Norwegian Authorities for approval during 2007. Several of the advisors will finish their terms during 2007 and an important activity will also be to recruit new advisers.

2 0 0 6 -2 0 07 Norwegian Petroleum Directorate O i l f o r d e v e l op m e n t

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