Petroleum Fund provides cushion as oil revenues and production drop
Timor-Leste’s extractive industries revenues fell by 15% to USD 3 billion in 2013. This was driven primarily by the reduction in income tax payments and revenues from penalties. Oil and gas production also declined by 12% compared to 2012, mainly due to depletion of the Kitan field. Kitan will close in 2016, leaving Bayu-Undan as the only remaining producing field in Timor-Leste. According to forecasts in the EITI Report, operations at Bauy-Undan will last until 2022.
Despite falling revenues and production, the investment return of Timor-Leste’s Petroleum Fund more than doubled from 2012 to 2013 from USD 401m to USD 865m. All the revenues from the country’s extractive sector are deposited in the Petroleum Fund. The 2013 EITI Report shows that for the first time, the withdrawals from the Petroleum Fund to finance the state budget – USD 760m - were less than the investment return.
Increasing state participation
In 2011 the government of Timor-Leste created a national oil company, TIMOR GAP, to represent the
government‘s interests in oil and gas operations. In 2013, TIMOR GAP signed its first Production Sharing Contract (PSC 11-106) for offshore exploration in a joint venture with ENI and INPEX. The 2013 EITI Report contains a description of how this contract was awarded, including the reasons for why it was awarded through direct negotiations rather than competitive bidding which is the usual practice for contract awards in Timor-Leste. TIMOR GAP holds a 24% share in the joint venture. Further information about the equity stake is not disclosed because of confidentiality provisions in the contract. According to the EITI Report, TIMOR GAP did not earn any revenue in 2013. It received USD 4m in support from the state budget.
To access 2015 data on oil and gas revenues and production in Timor-Leste, please visit the website of the National Petroleum Authorities of Timor-Leste: http://www.anp-tl.org/