east timoreconomylusophony

Major share buyout at Greater Sunrise “is historic”

The purchase of a majority stake in the consortium of the Greater Sunrise wells in the Timor Sea is historic for Timor-Leste that is able to change the exploration of the country’s main resource, Xanana Gusmão said today.

“When we want something that takes time, it requires effort, but I am satisfied that, as a natural result of border delimitation, we will be able to change the conditions of exploitation of Greater Sunrise,” he said in Bali, Indonesia, the Timor-Leste Special Representative for the Timor Sea issues.

Xanana Gusmão referred to the agreement signed on behalf of the Government of Timor-Leste with Shell Australia’s Executive Chairman Zoe Yujnovich on Friday to buy a 26.56% stake held by the company in the Greater Sunrise consortium for 300 million dollars.

The operation, which also depends on the approval of the Government and the Timorese parliament and regulators, adds up to the 30% stake acquired from ConocoPhillips in September, giving Timor-Leste a 56.56% majority in the consortium.

The Greater Sunrise oil field consortium in the Timor Sea is led by Australia’s Woodside, the operator (with 34.5% of the capital), and includes ConocoPhillips (30%), Shell (28.5%) and Osaka Gas (10%).

“Shell has been very cooperative,” he said. “Greater Sunrise has lasted too long since 1974, too much time for them and they understand the state’s desire to develop and stimulate the economy.

The purchase of the stake necessarily implies a greater Timorese investment in the upstream component of the project and Xanana Gusmão guarantees that, although it cannot “say everything” for now “there are good signs” and “various forms of financing.”

“We are getting good signals on financing. I have contacted several people and institutions about the mechanisms and are open to several options,” he said.

Woodside, which has so far been the operator of the project, has already been open to negotiations with Timor-Leste, but Xanana Gusmão insists she prefers this dialogue to begin when purchases are actually paid.

“Let’s pay first so that we sit down with dignity, with serenity, to define things,” he explained.

To this end, Xanana Gusmão is convinced that the President of the Republic will not block a set of legislative changes, already approved by the majority of the parliamentary seats so that the operation is financed directly by the Petroleum Fund as an investment, not through the General Budget of the State (OGE).

“I think we were very dependent on OGE because we had to give Conoco a guarantee to sell it,” he explained.

“We put this in the OGE, I know that the Government is lacking funds for its programs, let alone the first year of its mandate, and so we have seen this option of the oil activities law and the oil fund law,” he explained.

One option, he said, would not be an OGE expense, but an “investment in a sector that will later produce money for the Petroleum Fund” by securing investment revenues in the markets over the life of the project.

“It was not a magical idea, but it was the most correct decision to buy these stocks,” he said.

The next phase, he said, is, on his return to Timor-Leste, a meeting with the President of the Republic, Francisco Guterres Lu-Olo, who will appeal “to enact the law”, if possible, to allow them to pay, until December, the operations of Greater Sunrise.

“If we pay back in December, the Timor Gap may already be sitting in the joint venture,” he said.

On December 8, he said, a broad public meeting is planned in Dili, in which all sectors of Timorese society will participate to explain all aspects of the project.

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