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ANPM's President discusses Timor-Leste's energy future

In this interview, Florentino Soares Ferreira, President of the ANPM, Timor-Leste’s National Hydrocarbons Authority, discusses the country's second licensing round, onshore exploration updates, ANPM's new net-zero initiative, and the scope of opportunities available for investors and service providers in Timor-Leste.

How is the Second Licensing Round proceeding? What can you tell us about the prequalification process? What are the next steps?

It is a pleasure to confirm that the Second Licensing Round of East- Timor is successfully moving forward. Considering that the 2020 pandemic caused serious traveling and investment constraints in the energy sector– that extended deep into 2021- we are happy to continue to perceive international appetite for our market and to have been able to re-confirm the commitment of some of our long time partners.

So far, approximately 15 companies have submitted their documentation to be considered for pre-qualification. The ANPM’s due diligence team is evaluating these submissions to assess the companies on a number of categories: technical and financial capabilities, technical competence, legal competence and experience in local content execution. Next, all those companies that have proven to fulfil ANPM’s requirements will be announced as “Prequalified” and would be ready to participate in the submission bidding that runs until 4th March 2022. Finally, the appraisal of the bidding documents will take place, and the round’s results will be announced by the end of April 2022. We expect to receive and shake hands with all of our partners and newcomers in Dili by June 2022.

That is indeed a very impressive number, considering that 2020 and 2021 were difficult years to promote a frontier exploration market and attract partners. What can you tell us about ANPM’s strategy to face these challenges?

ANPM reacted to the crisis immediately. Borders closed first in Australia and overall South East Asia so we estimated that the entire globe would follow. In order to mitigate this, our block promotion and roadshow strategy had to quickly be adapted: we organized two virtual summits together with our partners in IN-VR, that allowed us to get in touch with the executives and representatives of the IECs during the lockdown. We hosted over 500 IEC representatives and over 30 local and international speakers. While our team got in touch with our long-time and new interested parties digitally to make sure all information was provided, on Q4 of 2021 part of our team managed to attend several international conferences to meet IECs face-to-face.

In recent months, we have noticed a lot of activity in onshore upstream, with the Feto Kmaus exploration well, and Karau. What can you share about onshore exploration in the country?

Yes, activity is just starting in onshore upstream. These are the first wells to be drilled after half a century, which is very exciting and promising for the country’s development. The Feto Kmaus exploration well was drilled in the Suai area, Southwest Timor-Leste and the operator has already declared a technical discovery. We look forward to receiving the commercial discovery results soon as this is considered an “exploratory well” ( no prospect studies have been intensified in onshore Timor-Leste for the last fifty years).

Moving forward, the plan is to have another two wells drilled in block A, which is in Suai area. After the completion of the drilling they will be moving to the awarded blocks in Ainaro and Manufahi areas which are located in the centre and southern regions of the Timor island. These blocks were awarded to Timor-Resources and Timor GAP, and have been studied extensively, in the geological and seismic areas.

Regarding Midstream and Downstream, the country is shifting from a concentrated mega-project, the Tasi Mane, to a more strategically distributed cluster of projects all over the country. Could you walk us through this change in strategy and tell us more about this plan?

The previous midstream and downstream plan was mainly concentrated on a project called Tasi-Mane, under the supervision of Timor GAP, and the previous management of Timor GAP. In recent years we realized that there should be some sort of redefinition and realignment in the Tasi Mane project, with a realistic approach. The new strategic model is mainly emphasizing on the importance of the upstream discoveries and unlocking the resources in the upstream sector. Currently, we are focusing on the 18 blocks available. Once the upstream sector generates a lot of confidence, we will be able to effectively implement the midstream and upstream.

We have decided to divide the country based on two technical perspectives: an oil province and a gas province. The ANPM is currently developing the national gas policy which will dictate the development of the midstream infrastructure, such as pipelines. Within this policy we aim for a pipeline that will connect our onshore LNG plant and the potential gas fields in the upstream. One of the discovered gas fields is Greater Sunrise, and we look forward to developing this field with the aim to also develop subsequent gas fields within our gas province.

This will of course give effect to the country’s onshore LNG and Downstream plan. Are there any plans of expansion on this front?

Yes. Naturally and over time, the LNG plan trains will be added, subject to the supply or discovery from other fields in the offshore or onshore Timor Leste. In parallel, our refinery plan will be heavily dependent on our oil fields that would be discovered or redeveloped within our oil provinces.

In the past, the development of a refinery was considered uneconomic mainly due to the lack of a feedstock. In order for the economics to work, our main task is to ensure that the upstream pieces are in place, particularly in relation to discovery, exploration and redevelopment of the oil fields. The ANPM is working day and night with public and private sector for this to happen.

Now moving on to a very trending topic: net-zero and carbon-neutrality goals. The ANPM has launched a big plan to help investors and energy companies in their decarbonization path. Would you like to share some of these with us?

Of course! This is a very exciting new initiative for East-Timor. As you might be aware, on 13th September 2021, with the support of our national Government, the ANPM signed an Memorandum of Understanding with Australian-based energy giant, Santos.

This MOU details Bayu Undan block as the main area to trigger our first Carbon Capture Storage project. We will be testing the viability of repurposing the existing Bayu Undan facilities and using the reservoir for CCS. This project will enable both Timor-Leste and Australia to exploit their untapped resources and meet regional energy demands while offsetting carbon emissions.

Despite Timor-Leste being one of the lowest emission countries in the world and not really binding to the Paris agreement, we understand that carbon trading or carbon credit markets are an integral part of our future economy. With this in mind, we have started the required conversations and we are building the framework to commercialize it. We are targeting 10 million tonnes of CO2 per annum, with the potential reservoir to host up to 250 million tonnes for over 25 years. I personally believe this will become one of the largest CCS projects in the Southern hemisphere.

It is indeed very exciting to hear about this first CCS project. How can other companies get involved?

In order to attract the IECs and potential investors, we are communicating our commitment to align with the recent movement in the energy industry for lower emissions, despite already being a lower emission country ourselves. We will be investing in enabling this environmental component, building the correct regulatory framework and implementing it into our potential projects. As soon as Timor Leste moves ahead with CCS, we will be able to stockpile a large number of carbon credits. Companies investing in our country, will be eligible to utilize these carbon credits, making sure that their projects can be converted into carbon-neutral projects.

At the end of the day, Timor Leste we'll be able to meet domestic energy demands while helping with carbon-neutrality regionally and globally. It is a win-win situation. I've noticed that you are very vocal about local content, both online and offline. Could you summarize your opinion on local content requirements?

The way I see it, for developing countries like Timor-Leste, local content is the backbone of any growing industry. For the last seventeen years since our first oil production in 2005 or even since our independence in 2002, our country was not able to implement an effective local content policy. This needs to change in order for public policy to serve the industry's growth itself.