Power Play: Tiny East Timor bets heavily on oil and gas
Power Play: Tiny East Timor bets heavily on oil and gas
SUAI, East Timor: Sixteen years after East Timor secured its independence, the government of this small nation is betting on a new and huge refinery complex to help secure its economic future.
But there is a problem, according to critics of the plan: if the project fails, a country that was once colonized by Portugal and then occupied by Indonesia could run out of cash and be left at the mercy of foreign interests, putting that difficult success Independence at risk.
Authorities say the project is crucial to the long-term economic survival of the 1.3 million people of East Timor. They say that it will generate much-needed income and help the country to differentiate itself from its larger neighbors, Australia and Indonesia, as well as to China, and that will not let the country be forced to surpass the foreign influence.
People play on the beach in Dili, the capital of East Timor.
The project could buy East Timor, which occupies the eastern half of an island it shares with Indonesia, enough to develop new businesses, including tourism and agriculture, said Alfredo Pires, interim minister of oil.
"We are not asking for charity or help," said Eddy Monis, who oversees a construction team on a new highway that is being built as part of the project. "We only want the right to be respected."
But while new oil and gas fields are being explored, most of their reserves are unproven and critics say that extracting them is not economically viable.
Operational Fields of East Timor according to commercial estimates, it will be depleted by 2022 and the country has already received more than 90% of the revenue it is likely to get from them, according to analysts from the local policy expert group La'o Hamutuk.
The oil-rich sovereign wealth fund that pays more than four-fifths of government spending will run out of cash within a decade unless alternative sources of financing are found or spending is reduced, if the costs are taken into account. estimated in the refinery project, according to the group of non-profit experts, whose donors include a Catholic charity in Germany and the Norwegian government.
"Instead of spending billions of dollars on oil infrastructure that can never produce a significant return, the country should invest in its human resources," said Charles Scheiner, principal investigator at La'o Hamutuk.
A new road is being built as part of the refinery project, but local farmers see the road as a luxury for the rich.
The project includes an oil refinery and a liquefied natural gas processing plant, as well as a highway, an airport and an LNG pipeline from the Greater Sunrise field, which is considered the most economically viable field to develop and is the most big tested. Untapped resource. The construction extends along the southern coast of the country.
Greater Sunrise oil and gas field
The Suai airport, a city of 20,000 inhabitants, is now open and can receive 200-seat aircraft; It was built by an Indonesian company. The first 30 kilometers of the highway, built by the Chinese state contractor China Overseas Engineering Group, are almost finished. The Timorese workers are retouching the final details, supervised by Chinese supervisors. The government has financed the projects without incurring a significant debt, and La'o Hamutuk estimates that he has spent more than $ 300 million.
The construction stands out in the rural landscape, where many people still live in houses of wood and straw. The airport handles only a few small propeller passenger aircraft each day. The terminal building has not yet been opened, and nearby villagers who were relocated and promised jobs when they left their land are still unemployed.
Most area residents are subsistence farmers who see the four-lane highway as a luxury for the rich. Few trucks or own cars. Joao Gusmao, head of a local village, said that residents, including pregnant women, have to cross the road to tend their crops.
A new Indonesian company built a new airport in Suai capable of receiving 200-seat aircraft.
"As village chief, I am not against development," he said. "But the type of development should not leave the people."
The next step will involve even greater expenses. On October 1, the Timorese government agreed to buy a 30% stake in the Greater Sunrise field of
For $ 350 million. He will still have to negotiate with three other joint venture partners to persuade them to send the gas to East Timor and increase their share of the extraction costs.
But there are doubts about the amount of oil and gas that East Timor can squeeze out of the surrounding oceans. And the partners of the joint venture, which are international oil companies, have mocked the feasibility of pumping gas to the new processing facilities in East Timor instead of those existing in Australia, with which East Timor shares income rights. To field.
Locals sell fruits and vegetables in Dili, above. Below, people gather for the first mass in a new church in Zumalai.
If, however, the government goes ahead and builds the refinery and the LNG plant, the costs will increase much more. The government expects private companies to intervene to help pay for the projects, but critics worry that East Timor will have to assume significant debt to complete them.
The government discards skepticism. Officials say the new oil and gas fields, including Greater Sunrise and other reserves, could be worth up to $ 370 billion over the next 50 years. The East Timor oil and gas operational fields have earned the country $ 22 billion in the last 14 years.
"There is a continuous effort to try to find more resources and it may not always coincide with the production of the declining field, but hope should not be lost," said Francisco Monteiro, executive director of Timor Gap, the national oil company.
Many East Timorese say that the refinery project is a symbol of their right to self-determination after hundreds of years of colonization. The Indonesian army burned settlements across the country when it left in 1999, after the international community pressured Jakarta to allow a referendum on independence.
Mr. Monis, the construction supervisor and others pointed to places where oil still sprouts from the ground through spikes drilled by seekers that no longer existed. Natural gas also flows from the ground. In his backyard, Mr. Monis lit one of these "leaks", allowing it to burn with a small blue flame.
Mr. Pires, interim oil minister, said that once the refinery complex begins to operate, private companies will come to the area to create new businesses. The proposals have already been considered for a cruise port, a slaughterhouse and a refueling depot, he said.
"Give us an opportunity," said Mr. Pires. "We are building a country from scratch."
Locals wait for buses in Dili.
-Robb Stewart in Melbourne contributed to this article.
Write to Jake Maxwell Watts in jake.watts@wsj.com
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