The BGA Timor-Leste team led by Senior Advisor Amb. Ian Kemish wrote an update to clients on new attempts by the Timor-Leste government to address serious economic challenges through the revitalization of a previously stalled oil and gas deal.

Context

  • Timor-Leste continues to face serious economic and political challenges six months after the swearing-in of independence figure Jose Ramos-Horta as president. Ramos-Horta has warned that his nation of 1.3 million people is facing a “fiscal cliff” owing to its dwindling national petroleum wealth fund, which is projected to run out by 2030.
  • Ramos-Horta is calling for a deal to be reached for the joint development of the Greater Sunrise undersea gas and oil reserves by the end of 2022. Valued at $50 billion and largely sitting in Timor-Leste’s waters, the reserves remain untapped due to protracted negotiations between the Timor-Leste government and its development partner, the Australian company Woodside Energy.

Significance

  • The deal has led to tension between Timor-Leste and Australia, with Timor-Leste threatening to turn to China. Timor-Leste wants the gas processed onshore in the country’s south, which Woodside views as economically unviable. The company maintains that the only feasible approach is via established processing infrastructure in Darwin, in Australia’s north.
  • Despite these differences, Timor-Leste’s relationship with Canberra is improving steadily, as was clear during Ramos-Horta’s state visit to Australia in the first week of September. The visit saw Australia and Timor-Leste sign a defense cooperation agreement, and Ramos-Horta clearly asserted the primacy of the Australian security relationship in his public remarks.

Implications

  • Companies should continue to monitor progress on the joint development of Greater Sunrise, as Greater Sunrise sits at the intersection of Timor-Leste’s geopolitical outlook and shifts in ties with key countries like Australia can play an important role in affecting the country’s investment environment.
  • The parliamentary elections scheduled for March 2023 could see the return of the country’s former prime minister and founding father Xanana Gusmao, which could lead to the further strengthening of the government’s nationalist position on the development of natural resources.

We will continue to keep you updated on developments in Timor-Leste as they occur. If you have any comments or questions, please contact BGA Senior Advisor Amb. Ian Kemish at ikemish@bowergroupasia.com.

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Senior Advisor

Ian joins BGA as senior advisor for Australia, Papua New Guinea, Timor-Leste and Fiji. Previously he served as chief people and sustainability officer for Newcrest Mining. In addition to his regional expertise, he is available to support teams working on energy, mining and other natural resource questions. Ian is a former senior Australian diplomat, whose 25-year career with the Australian government included service as international policy advisor to the prime minister, as ambassador to Germany and as high commissioner to Papua New Guinea. Ian is one of the world’s top experts on Papua New Guinea, having grown up there, speaking ... Read More