Building a nation from the ground up

Timor-Leste is a young nation facing great challenges. But the national authorities have built up a system of oil and gas management which is winning international acclaim.

"The entire petroleum administration in this country has developed in leaps and bounds," says project coordinator Odd Raustein in Timor-Leste.  Raustein is a chartered engineer seconded from the Norwegian Petroleum Directorate to Norad, which is responsible for implementation of the Norwegian government's Oil for Development program.

Norwegian oil experts have worked in Timor-Leste since 2003. They have thus been involved since the beginning of the petroleum industry in this country which only gained independence from Indonesia in 2002.

Basically, Timor-Leste is a country with major economic and social challenges.  When the country got its independence, it was among the poorest in Asia. More than half of the population of approximately one million people is teen-aged or younger. Timor-Leste has no industrial tradition, and foreign companies continue to hesitate to invest in the country because of the high political risk.

But according to Raustein, the petroleum administration has gained international recognition as the most professional sector in the country.  Among those praising the authorities for their transparency is the anti-corruption organisation, Extractive Industries Transparency Initative (EITI).

Raustein lists what has been achieved in the six years which have passed since the cooperation project started up: Timor-Leste carried out its first licensing round in 2005, and in the summer of 2008 established its own ”Petroleum Directorate”, the  Autoridade Nacional do Petróleo (ANP) - The National Petroleum Authority.  Furthermore the authorities have established a petroleum revenue fund patterned after the Norwegian model.  Now, in 2009, the fund has holdings of approximately five billion US dollars, and according to Raustein, it is yielding good returns, which are being phased into the country's economy according to carefully set rules.

Moreover, the country has built up an educational offering within the petroleum sector, including several bachelor's and master's degrees, Raustein says. For example, four people from Timor-Leste are studying in Norway with a view towards earning master's degrees in various fields.

So far, only one gas and condensate field – operated by ConocoPhillips – has gone into production in Timor-Leste. The gas from this field is being landed in Australia, while the condensate is loaded onto tankers at sea. But there are development plans for an oil field, and an ongoing discussion about a development concept for an additional gas field, in which one of the topics is where to land that gas. Moreover, there are plans for exploration drilling in the Timor sea, where all of the oil and gas reserves proven so far are located.

The Norwegian development aid has concentrated on building up the Timor-Lesteese resource and financial management systems. This work is being extended for a new five-year period which started last autumn. The new program will also include environmental management.

The future of Timor-Leste. Children playing in Vila, Atauro
The future of Timor-Leste. Children playing in Vila, Atauro