Timor’s Help in Draft Oil Law

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Timor-Leste’s ambassador to Cambodia, Felicidade de Sousa Guterres, met with Deputy Prime Minister Sok An yesterday. Supplied

Timor-Leste’s fledgling economy depends on oil and gas production and Cambodia is seeking assistance from Asia’s youngest nation to help develop its draft petroleum law which is expected to be adopted into legislation by the Council of Ministers next year.
The appeal was made yesterday by Deputy Prime Minister Sok An when he met with Timor-Leste’s ambassador to Cambodia, Felicidade de Sousa Guterres, in his office, according to Ek Tha, deputy director of the Office of the Council of Minister’s Press Department.
Mr. Sok An, who is also minister of the Council of Ministers, was quoted by Mr. Ek Tha as saying that due to Timor-Leste’s experience in the oil and gas industry he was keen to seek their assistance in helping Cambodia finalize the draft petroleum law.
“Timor-Leste has got good experience in the commercial oil and gas industry and in the coming future officials from the Ministry of Mines and Energy will visit the country to learn from the Timorese on how to commercialize oil and gas resources,” said Mr. Ek Tha, who was quoting Mr. Sok An.
Meng Saktheara, a secretary of state at the Ministry of Mines and Energy, said Tuesday the draft petroleum law will be directly implemented to ensure transparency, fairness and responsibility when Cambodia extracts its first oil in either 2018 or 2019. He added that the ministry is trying to complete the law before Cambodia starts extracting oil.
“The Kingdom’s first oil extraction would not happen until 2018 or it may be delayed another year if the global oil price is on the wane and the price is not stable. However, if the global oil price is increasing, we will push it as much as we can,” he said.
According to the Extractive Industries Transparency Initiative (EITI), oil and gas exports account for more than 95 percent of Timor-Leste’s state revenues, making it one of the most petroleum-dependent countries in the world. There is considerable debate among economists for the need of the young country to diversify its economy due to revenues currently under pressure by low oil prices.
In 1999, following a UN-sponsored referendum, Indonesia relinquished control of its territory then known as East Timor after 24 years of brutal occupation. In May 2002, Timor-Leste became the youngest nation in the 21st century. In 2011, Timor-Leste announced its intention to gain membership status in Asean.
In June, Prime Minister Hun Sen announced that Cambodia supported the fledgling nation’s bid to become the 11th member of Asean after meeting Timor-Leste Prime Minister Rui Maria de Aroujo at the sidelines of the World Economic Forum on Asean in Kuala Lumpur.
Currently both Timor-Leste and neighboring Australia are locked in a dispute over maritime boundary, which was agreed to in 1972 between Indonesia and Australia before the then East Timor’s independence. In 2006, Australia and Timor-Leste entered into an agreement to equally share revenue from the production of petroleum in the Joint Petroleum Development Area between both nations. Timor-Leste, however, claims that Australia is illegally occupying its maritime territory to take its oil and gas resources.
“We need to learn from Timor-Leste on how to tackle overlapping maritime claims in oil and gas producing areas, if we are challenged by others,” said Mr. Ek Tha, who was quoting Mr. Sok An.
According to Mr. Ek Tha, Mr. Sok An said: “Timor-Leste has also taken their dispute to the United Nations and we also need to learn how to do that, in case it happens.”
Cambodia’s draft petroleum law was drawn up in 2014 after the Ministry of Mines and Energy was established. The draft of the law was made in reference to and based on the petroleum law drafted by the former Cambodian National Petroleum Authority. There are various similar laws in Asean countries and in places like Norway and they have all involved consultations with other ministries, NGOs, the private sector and law firms.
Cambodia’s offshore oil and gas reserves had been considered a potential source of revenue for poverty alleviation, but private-sector interest in them waned as the price of oil fell.
KrisEnergy bought the total shareholding controlled by Chevron in Block A in August 2014, raising its stake in the block to 52.25 percent. The company’s other partners are Japan’s Moeco with 28.5 percent, Korean-owned GS Energy with 14.25 percent and Cambodia National Petroleum Authority with five percent. The contract area covers 4,709 square kilometers across the Khmer Basin in the Gulf of Thailand, where water depths range from 50 to 80 meters.
 The government canceled two concessions for offshore oil – Block B and Block F – held by two foreign companies last year because they failed to comply with the terms of their agreements.  Block B has a total area of 6,300 square kilometers while block F covers 7,000 square kilometers.

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