Wednesday, August 23, 2006

East Timor Petroleum Fund doubles to US$700 million

In the last few months, East Timor Petroleum Fund has doubled to US$700 million, thanks to high oil price, prime minister Ramos Horta told a Asean 100 conference today.

The Petroleum Fund is structured to build on international best practice for transparency, accountability and prudent management of petroleum wealth. It should contribute to strong economic growth and improved government services and infrastructure in East Timor.
"With the fund, we managed to finance 100% of the state budget outside the foreign aid. We'll invest heavily in improving education, healthcare & infrastructure," he said.
The Fund's balance is derived mainly from petroleum activities in the Australia-East Timor Joint Petroleum Development Area (JPDA). Under the 2002 Timor Sea Treaty, Australia agreed that East Timor would receive 90 per cent of the petroleum revenues from the JPDA, mainly operated by ConocoPhillips.
East Timorese Government revenues from the JPDA could deliver around $15 billion to East Timor over the next 20 years, averaging around $2 million per day. Late last year, East Timor government announced the balance was US$330 million.
The Petroleum Fund is a concept the East Timorese have borrowed from Norway, which developed a similar fund to manage its oil and cash flows from the North Sea. The Fund is administered by an independent council.
Other than this, East Timor and Australia is working on Greater Sunrise project, in which both countries agreed to share equally (50:50) the upstream revenues from the resource.
"We're discussing the pipeline with Darwin administration. We surely want the pipeline to East Timor," PM Horta said.
As reported by Dow Jones previously, Sunrise partners Royal Dutch/Shell Group (RD) and Woodside backed floating LNG for Sunrise, while U.S. partner ConocoPhillips (COP) has argued in favor of a pipeline to Darwin. Woodside has 33.4% of the project, ConocoPhillips has 30% and Shell has 26.6%, and Osaka Gas with 10%.
Once the Greater Sunrise project proceeds, it could result in transfers of revenue to East Timor of as much as US$4 billion over the life of the project, increasing its share of the resource to around US$10 billion.

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