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Timor-Leste Government Restructures Petroleum Regulation

March 2007 - ongoing

Link to La'o Hamutuk April submission.

Link to La'o Hamutuk July submission.

Link to article in June 2007 La'o Hamutuk Bulletin about this issue, with background, summary, and current status.

Link to article in September 2007 La'o Hamutuk Bulletin about this issue, summarizing our July submission and updating the status.

The government of Timor-Leste is restructuring its mechanisms for regulating petroleum activities. Private discussions have been underway within the government since September 2006, and these decree-laws could be enacted by the Council of Ministers by the end of May 2007.

In late March 2007, the Ministry of Natural Resources, Minerals and Energy Policy circulated proposed decree-laws about how the Timor Sea Designated Authority (TSDA) will become a Timor-Leste government agency (merging with the National Oil Gas and Energy Directorate). This is required by the 2002 Timor Sea Treaty which established the TSDA to oversee oil and gas exploration and extraction (upstream) projects in the Joint Petroleum Development Area, shared with Australia. The Timor Sea Treaty requires the TSDA to become part of the Timor-Leste Government within a few years, a time period which has been extended three times.

A second proposed decree-law will create and establish the structure for a Timor-Leste national oil company (PETROTIL), which will conduct both upstream and downstream activities, while a third creates a National Council on Energy Policy to set policies for extraction, development, and distribution of oil, gas and other energy resources.

The Ministry announced a 15-day public consultation ending on 5 April 2007 and requested comments on the following documents:

The brief consultation was announced only in the newspaper, and the draft laws were available only in Portuguese. The Petroleum Fund Consultative Council wrote to the Ministry and the NGO network Core Group on Transparency held a press conference objecting to the process. 

To our knowledge, the Ministry received only two substantive submissions prior to the 5 April deadline, from:

More submissions were accepted after the deadline, including from:

The main points in La'o Hamutuk's April submission are:

  • This submission discusses general issues, as time is too short to provide detailed analysis.

  • The time, notice, language and media used for this public consultation make it impossible to get meaningful input from Timor-Leste’s population or outside experts, and the consultation should be extended or re-opened.

  • Major legislation should not be enacted during a social and political crisis or just before a national election. There is no reason these decree-laws need to be passed in such a rushed manner.

  • These draft laws prioritize money for “economic agents” above the needs and rights of our population, and benefit businesses and people in rich countries more than Timor-Leste’s citizens.

  • If enacted, these draft laws will endanger our environment and discourage Timor-Leste from exploring options for clean, renewable energy.

  • These draft laws excessively concentrate power in one ministry, thereby risking corruption, abuse of power and maladministration.

  • These draft laws totally fail to implement the Government’s stated commitment to transparency and accountability (including the Extractive Industries Transparency Initiative), and could undermine existing steps toward adopting these principles.

  • These draft laws allow conflicts of interest and contain almost no safeguards against corruption.

  • The ARNP violates the Petroleum Fund Act’s requirement that all Government revenues from petroleum activities be deposited directly into the Petroleum Fund.

  • National oil companies bring risks as well as benefits; the proposed PETROTIL statutes do not protect against the dangers.

In mid-April, La'o Hamutuk was informed unofficially that the time for submissions has been extended, that our recommendation that such complex and far-reaching legislation not be enacted hastily during an election period was accepted, and that the process would be delayed for a few months. Several Timorese government officials told La'o Hamutuk that they appreciated our input, as it helped them advocate for a more open process during internal discussions.

On 1 June, Minister Jose Teixeira told a public seminar that these laws are only drafts, unlikely to be enacted quickly. A second round of redrafting is underway, and new versions may be announced in July.

On 27 July, La'o Hamutuk made a second, more extensive, submission on these proposed laws.

In late June, Timor-Leste and Australia agreed to extend the life of the TSDA, which had been scheduled to expire in July 2007, until 2 January 2008.

In August, the new Government split up the former Ministry for Natural Resources, Minerals and Energy Policy. Alfredo Pires became Secretary of State for Natural Resources and Avelinho Coelho became Secretary of State for Energy Policy. Secretary Pires described his plans, which would incorporate the ARNP and PETROTIL in a Petroleum Optimization Act, at a La'o Hamutuk public meeting on 20 September.

The September 2007 La'o Hamutuk Bulletin contains a report on this issue.

On 21 December 2007, the Joint Commission agreed to extend the TSDA mandate for six months more, to 30 June 2008.

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
Rua D. Alberto Ricardo, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-77234330
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