E.Timor min eyes oil fund for infrastructure spending
East Timor should spend more of its $5.1 billion (3.1 billion pounds) Petroleum Fund and use foreign loans to build essential infrastructure and spur economic growth, the oil and gas-rich country's natural resources minister said on Monday.
Alfredo Pires, East Timor's Secretary of State of Natural Resources, said that $400-500 million was spent from the Petroleum Fund last year, while the country urgently needs to spend at least $2 billion on building roads, ports, and tourist infrastructure such as a new international airport.
Royalties from oil and gas deposits under the Timor Sea are collected in East Timor's Petroleum Fund, which is growing by as much as $100 million a month.
But the use of those proceeds is hotly debated, with some officials pushing for a higher proportion to be earmarked for spending on basic facilities, particularly roads, which are in very poor condition.
"An international airport would cost $600 million. We are going to have to think about roads, tunnels, and bridges, and that could be $2 billion. We haven't even got to the port yet," said Pires in an interview with Reuters.
"So definitely we will need a couple of billion (dollars) to get these basic infrastructure projects going."
While Pires declined to say how much of the Petroleum Fund should be spent, he said there was no reason why Dili should not use $1 billion from the fund and $1 billion in foreign loans.
"I keep telling the operators who tell me Timor Leste (East Timor) is in desperate need of funds, that things have changed. This country now has financial means," said Pires, 44, who grew up in Australia and whose sister Emilia is East Timor's finance minister.
"If we don't solve this much quicker, the opportunity will be lost. While we are not fixing infrastructure, how much are we losing in tourism?" he said.
Pires said a National Oil Company would be legislated for this year and its business plan written next year.
He said that the Bayu Undan field is expected to reap $12-15 billion for East Timor by the end of 2023, but that the gas field could be even bigger than first thought.
Pires said the government was in talks with China to develop oil and gas projects in East Timor, but declined to give details.
"There's definite potential. We are talking. I can say there is interest and it's not just PetroChina, it's a few other companies as well," he said.
China's ambassador to East Timor, Fu Yuancong, told Reuters that PetroChina did a seismic investigation to find onshore oil a few years ago but that there had been no further progress with the project since then.
"The leaders of Timor Leste talked with me many times to say they would like to invite Chinese companies to have some oil exploration in future," he said.
"But the oil resource in Timor Leste is explored and managed by the international companies. The Timor Leste government should give (us) a concrete project for co-operation."
Pires said East Timor would meet with Australian officials in November for the next round of negotiations over the oil and gas-rich Greater Sunrise field.
Dili wants a pipeline from the field to lead to a proposed LNG processing facility in East Timor, while Australian company Woodside Petroleum Ltd, which has a 33 percent stake in the field, wants a pipeline to Darwin or to a floating facility.
"The pipeline has to come to Timor Leste. We will not entertain another option. The sooner they come around the sooner we can move on," said Pires.
(Reporting by Sunanda Creagh in Dili; Editing by Sara Webb)