Energy-hungry China goes fishing for natural resources in East Timor 
September 15, 2009

By Sunanda Creagh and Tito Belo

Dili's gleaming new presidential palace and foreign ministry offices stand in stark contrast to nearby burnt-out buildings. 

These gifts from China are symbols of the energy-hungry superpower's growing closeness to tiny, oil-rich East Timor.

In the 10 years since the independence vote that led to a East Timor's split from Indonesia, China has spent more than $53 million (about R400m) in aid to the island nation.

While that is just a fraction of the $760m in Australian aid, China has raised its profile in Dili in several other ways.

It is building big and showing generosity, such as its donation of 8 000 tons of rice during a recent food crisis.

Noticeable projects such as a new ministry of defence building, houses for soldiers and schools are under way, as are scholarships and training programmes for civil servants.

In all, China is sending a very public message that it is serious about strengthening bilateral ties with East Timor, which many analysts put down to China's desire to diversify its strategic energy interests.

Loro Horta, who is the son of East Timor's President Jose Ramos-Horta and a China expert at Singapore's Nanyang Technological University, said the aid was linked to China's desire for energy and infrastructure contracts. "The Chinese are desperate for oil, and they are definitely looking to Timor as potential to meet that need," he said.

East Timor, known officially as Timor-Leste, is one of Asia's poorest and least developed countries, but it has enormous oil and gas reserves.

The Bayu Undan gas field is expected to reap between $12 billion and $15bn by 2023, according to Natural Resources Minister Alfredo Pires.

Another oil field, Kitan, has an estimated 40 million barrels of recoverable light oil.

Lucrative opportunities also exist in the minerals sector, including copper, gold, silver and marble, and for big-ticket infrastructure projects.

Pires said Spain, China and Australia were keen on a piece of the Timorese resources pie, while Damien Kingsbury, an East Timor expert at Deakin University, said the US and the UK were also interested. China and East Timor's links date back centuries. Hakka Chinese traders sailed there more than 500 years ago looking for sandalwood, rosewood and mahogany. Many stayed on, forming a sizeable overseas Chinese community.

Today, Dili's main street is lined with buildings, some of which display Chinese script, families can be seen praying at a Confucian temple in downtown Dili, while Chinese traders run appliance stores on busy streets.

Chinese labourers are already at work on one of two heavy oil power plants that are under construction after Dili last year awarded the Chinese Nuclear Industry 22nd Construction Company a $360m contract to build the power plants and a national power grid.

Horta said China was also angling for big-ticket contracts such as a pipeline that East Timor wants built from its Greater Sunrise oil field to a proposed processing plant on land. He said Chinese oil giant PetroChina had already done studies and was keen to drill.

China's ambassador to East Timor, Fu Yuancong, rejected speculation that China's interest in the fledgling nation was driven by a desire to gain an advantage in bids to develop East Timor's oil and gas fields.

He said: "All this assistance from China to Timor Leste is full of sincerity and without any selfishness, unlike what the Western media has speculated. The Chinese government never bore any political strategy in Timor Leste." And as stability has slowly returned to Dili, Fu said that his government had encouraged a new generation of Chinese entrepreneurs to move to East Timor.

Horta added: "The growing Chinese presence is part of their natural expansion into southeast Asia and I think Timor is not really their priority. But they are definitely keeping an eye on it.

"The Chinese are very patient people and they think very long term." - Reuters


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